IDEAS home Printed from https://ideas.repec.org/a/spr/inrvec/v60y2013i3p293-317.html
   My bibliography  Save this article

Do political determinants affect the size and composition of public expenditure? A study of the Indian states

Author

Listed:
  • Bharatee Dash

    ()

  • Angara Raja

    ()

Abstract

This study examines whether there exists a systematic link between the size and composition of public expenditure and the political determinants across the Indian states. Three types of political determinants—forms of governments, government’s ideology, and electoral cycle—are identified and three sets of hypotheses are designed linking these characteristics with three different measures of public expenditure. The hypotheses are tested using a panel dataset of 14 Indian states spread over 27 fiscal years, from 1980–1981 to 2006–2007. The overall findings of the study suggest that the relationship between expenditure measures and political determinants across the Indian states validates the proposed hypotheses even after controlling for the traditional and other unobservable determinants. These findings are robust to various forms of sensitivity analysis. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Bharatee Dash & Angara Raja, 2013. "Do political determinants affect the size and composition of public expenditure? A study of the Indian states," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(3), pages 293-317, September.
  • Handle: RePEc:spr:inrvec:v:60:y:2013:i:3:p:293-317
    DOI: 10.1007/s12232-013-0173-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s12232-013-0173-5
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Khemani, Stuti, 2007. "Does delegation of fiscal policy to an independent agency make a difference? Evidence from intergovernmental transfers in India," Journal of Development Economics, Elsevier, vol. 82(2), pages 464-484, March.
    2. Tavares, Jose, 2004. "Does right or left matter? Cabinets, credibility and fiscal adjustments," Journal of Public Economics, Elsevier, vol. 88(12), pages 2447-2468, December.
    3. de Haan, Jakob & Sturm, Jan-Egbert, 1994. "Political and Institutional Determinants of Fiscal Policy in the European Community," Public Choice, Springer, vol. 80(1-2), pages 157-172, July.
    4. Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2009. "Electoral goals and center-state transfers: A theoretical model and empirical evidence from India," Journal of Development Economics, Elsevier, vol. 88(1), pages 103-119, January.
    5. Shi, Min & Svensson, Jakob, 2006. "Political budget cycles: Do they differ across countries and why?," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1367-1389, September.
    6. van Dalen, Hendrik P & Swank, Otto H, 1996. "Government Spending Cycles: Ideological or Opportunistic?," Public Choice, Springer, vol. 89(1-2), pages 183-200, October.
    7. Dollery, Brian E & Worthington, Andrew C, 1996. " The Empirical Analysis of Fiscal Illusion," Journal of Economic Surveys, Wiley Blackwell, vol. 10(3), pages 261-297, September.
    8. Harrinvirta, Markku & Mattila, Mikko, 2001. "The Hard Business of Balancing Budgets: A Study of Public Finances in Seventeen OECD Countries," British Journal of Political Science, Cambridge University Press, vol. 31(03), pages 497-521, July.
    9. Allan Drazen, 2001. "The Political Business Cycle After 25 Years," NBER Chapters,in: NBER Macroeconomics Annual 2000, Volume 15, pages 75-138 National Bureau of Economic Research, Inc.
    10. Schuknecht, Ludger, 2000. "Fiscal Policy Cycles and Public Expenditure in Developing Countries," Public Choice, Springer, vol. 102(1-2), pages 115-130, January.
    11. Drazen, Allan & Eslava, Marcela, 2010. "Electoral manipulation via voter-friendly spending: Theory and evidence," Journal of Development Economics, Elsevier, vol. 92(1), pages 39-52, May.
    12. repec:cup:apsrev:v:72:y:1978:i:04:p:1243-1261_15 is not listed on IDEAS
    13. Glyn, Andrew, 1998. "The Assessment: Economic Policy and Social Democracy," Oxford Review of Economic Policy, Oxford University Press, vol. 14(1), pages 1-18, Spring.
    14. Kausik Chaudhuri & Sugato Dasgupta, 2006. "The political determinants of fiscal policies in the states of India: An empirical investigation," Journal of Development Studies, Taylor & Francis Journals, vol. 42(4), pages 640-661.
    15. Khemani, Stuti, 2004. "Political cycles in a developing economy: effect of elections in the Indian States," Journal of Development Economics, Elsevier, vol. 73(1), pages 125-154, February.
    16. Perotti, Roberto & Kontopoulos, Yianos, 2002. "Fragmented fiscal policy," Journal of Public Economics, Elsevier, vol. 86(2), pages 191-222, November.
    17. Padovano, Fabio & Venturi, Larissa, 2001. "Wars of Attrition in Italian Government Coalitions and Fiscal Performance: 1948-1994," Public Choice, Springer, vol. 109(1-2), pages 15-54, October.
    18. William D. Nordhaus, 1975. "The Political Business Cycle," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 169-190.
    19. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-664, August.
    20. Roberto Ricciuti, 2004. "Political Fragmentation and Fiscal Outcomes," Public Choice, Springer, vol. 118(3_4), pages 365-388, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohanty, Biswajit & Bhanumurthy, N. R. & Dastidar, Ananya Ghosh, 2017. "What explains Regional Imbalances in Infrastructure?: Evidence from Indian States," Working Papers 17/197, National Institute of Public Finance and Policy.
    2. repec:unt:jnapdj:v:24:y:2017:i:2:p:113-139 is not listed on IDEAS
    3. J. Stephen Ferris & Bharatee B. Dash, 2016. "Expenditure Visibility and Voter Memory: A Compositional Approach to the Political Budget Cycle in Indian States, 1959 – 2012," Carleton Economic Papers 16-14, Carleton University, Department of Economics.

    More about this item

    Keywords

    Political determinants; Public expenditure; Political parties; Interest groups; Indian states; H0; H1; H2;

    JEL classification:

    • H0 - Public Economics - - General
    • H1 - Public Economics - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:inrvec:v:60:y:2013:i:3:p:293-317. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Andrew Huffard) The email address of this maintainer does not seem to be valid anymore. Please ask Andrew Huffard to update the entry or send us the correct email address. General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.