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Do the personal characteristics of finance ministers affect changes in public debt?

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  • Marc-Daniel Moessinger

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Abstract

Using a unique dataset of the personal characteristics of national finance ministers in Western Europe (1980–2010), I show that a finance minister’s experience affects the national debt-to-GDP ratio. The increase in the debt-to-GDP ratio is smaller if the finance minister stays in office for an additional year. This result is robust to the inclusion of the personal characteristics of prime ministers and a measure of political stability. However, the magnitude of the effect is sensitive to how finance ministers are selected in the econometric model when more than one minister holds office during a particular year. The estimation of interaction terms further reveals that experience particularly matters in election years or in times of negative GDP growth because an experienced finance minister has the power to restrict the usual increase in the debt-to-GDP ratio. In contrast, a finance minister’s educational background and ideological leaning have no significant impact on the debt-to-GDP ratio. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Marc-Daniel Moessinger, 2014. "Do the personal characteristics of finance ministers affect changes in public debt?," Public Choice, Springer, vol. 161(1), pages 183-207, October.
  • Handle: RePEc:kap:pubcho:v:161:y:2014:i:1:p:183-207
    DOI: 10.1007/s11127-013-0147-x
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    Cited by:

    1. Chatagny, Florian, 2015. "Incentive effects of fiscal rules on the finance minister's behavior: Evidence from revenue projections in Swiss Cantons," European Journal of Political Economy, Elsevier, vol. 39(C), pages 184-200.
    2. Niklas Potrafke, 2019. "Fiscal Performance of Minority Governments: New Empirical Evidence for OECD Countries," CESifo Working Paper Series 7733, CESifo Group Munich.
    3. Chakraborty, Lekha S, 2019. "Indian Fiscal Federalism at the Crossroads: Some reflections," MPRA Paper 93516, University Library of Munich, Germany.
    4. repec:eee:poleco:v:55:y:2018:i:c:p:433-454 is not listed on IDEAS
    5. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität
      [Public Debt and Debt Mentality]
      ," MPRA Paper 79432, University Library of Munich, Germany.
    6. Lekha Chakraborty, 2019. "Indian Fiscal Federalism at the Crossroads: Some Reflections," Economics Working Paper Archive wp_937, Levy Economics Institute.
    7. Abel FRANCOIS & Sophie PANEL & Laurent WEILL, 2018. "Are Some Dictators More Attractive to Foreign Investors?," Working Papers of LaRGE Research Center 2018-05, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    8. Harry Pickard, 2018. "Does Congressional experience in US governors influence state transfers?," Working Papers 2018014, The University of Sheffield, Department of Economics.
    9. Gavoille, Nicolas, 2018. "Who are the ‘ghost’ MPs? Evidence from the French parliament," European Journal of Political Economy, Elsevier, vol. 53(C), pages 134-148.
    10. repec:eee:poleco:v:53:y:2018:i:c:p:186-204 is not listed on IDEAS
    11. Fuchs, Andreas & Richert, Katharina, 2015. "Do Development Minister Characteristics Affect Aid Giving?," Working Papers 0604, University of Heidelberg, Department of Economics.
    12. António Afonso & João Tovar Jalles, 2019. "Sovereign Ratings and Finance Ministers’ Characteristics," Working Papers REM 2019/72, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    13. Heinemann, Friedrich & Janeba, Eckhard & Schröder, Christoph & Streif, Frank, 2016. "Fiscal rules and compliance expectations – Evidence for the German debt brake," Journal of Public Economics, Elsevier, vol. 142(C), pages 11-23.
    14. Garmann, Sebastian, 2014. "Do government ideology and fragmentation matter for reducing CO2-emissions? Empirical evidence from OECD countries," Ecological Economics, Elsevier, vol. 105(C), pages 1-10.
    15. Adom, Philip Kofi, 2016. "The DDT Effect: The case of Economic Growth, Public Debt and Democracy Relationship," MPRA Paper 75022, University Library of Munich, Germany, revised 11 Nov 2016.
    16. Jacqmin, Julien & Lefebvre, Mathieu, 2016. "Does sector-specific experience matter? The case of European higher education ministers," Research Policy, Elsevier, vol. 45(5), pages 987-998.
    17. Bofinger, Peter & Schnabel, Isabel & Feld, Lars P. & Schmidt, Christoph M. & Wieland, Volker, 2014. "Mehr Vertrauen in Marktprozesse. Jahresgutachten 2014/15," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201415.
    18. repec:lus:reveco:v:68:y:2017:i:1:p:41-62:n:2 is not listed on IDEAS

    More about this item

    Keywords

    Public finance; Public debt; Finance minister; Personal characteristics; D78; H30; H62;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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