Are Budget Deficits Used Strategically?
This paper tests empirically the strategic explanation of budget deficits suggested by Tabellini and Alesina and Persson and Svensson. Tabellini and Alesina suggest that governments with di erent political orientation provide different public goods. The model predicts that: a) public good provision follows a political pattern; b) the incumbent that anticipates her defeat at the next election runs budget deficits to tie the hands of the future government. Persson and Svensson suggest that liberal governments prefer more public good provision than conservative ones. The model predicts that: a) the conservative (liberal) incumbent that anticipates her defeat at the next election runs budget deficits (surpluses); b) budget imbalances have a political color. Using U.S. and pooled data for sixteen OECD countries, we find little evidence that the incumbent's probability of being voted out of office explains budget deficits, that the provision of public goods follows a political pattern or that budget imbalances have a political color.
|Date of creation:||01 Jun 2003|
|Date of revision:|
|Contact details of provider:|| Postal: Boston College, 140 Commonwealth Avenue, Chestnut Hill MA 02467 USA|
Web page: http://fmwww.bc.edu/EC/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alesina, Alberto F & Tabellini, Guido, 1988.
"Voting on the Budget Deficit,"
CEPR Discussion Papers
269, C.E.P.R. Discussion Papers.
- Alberto Alesina & Guido Tabellini, 1988. "Voting on the Budget Deficit," NBER Working Papers 2759, National Bureau of Economic Research, Inc.
- Guido Tabellini & Alberto Alesina, 1988. "Voting on the Budget Deficit," UCLA Economics Working Papers 539, UCLA Department of Economics.
- Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," Scholarly Articles 4553030, Harvard University Department of Economics.
- Hausman, Jerry A., 1983. "Specification and estimation of simultaneous equation models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 1, chapter 7, pages 391-448 Elsevier.
- Alberto Alesina, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, Oxford University Press, vol. 102(3), pages 651-678.
- Murphy, Kevin M & Topel, Robert H, 2002.
"Estimation and Inference in Two-Step Econometric Models,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 20(1), pages 88-97, January.
- Murphy, Kevin M & Topel, Robert H, 1985. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(4), pages 370-79, October.
- Alesina, Alberto & Londregan, John, 1993. "A Model of the Political Economy of the United States," Scholarly Articles 4552529, Harvard University Department of Economics.
- James J. Heckman & Robert J. Willis, 1975.
"A Beta-Logistic Model for the Analysis of Sequential Labor Force Participation by Married Women,"
NBER Working Papers
0112, National Bureau of Economic Research, Inc.
- Heckman, James J & Willis, Robert J, 1977. "A Beta-logistic Model for the Analysis of Sequential Labor Force Participation by Married Women," Journal of Political Economy, University of Chicago Press, vol. 85(1), pages 27-58, February.
- Henning Bohn & Robert P. Inman, 1996.
"Balanced Budget Rules and Public Deficits: Evidence from the U.S. States,"
NBER Working Papers
5533, National Bureau of Economic Research, Inc.
- Bohn, Henning & Inman, Robert P., 1996. "Balanced-budget rules and public deficits: evidence from the U.S. states," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 13-76, December.
- Garfinkel, Michelle R & Glazer, Amihai, 1994. "Does Electoral Uncertainty Cause Economic Fluctuations?," American Economic Review, American Economic Association, vol. 84(2), pages 169-73, May.
- Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
- Bharat Trehan & Carl E. Walsh, 1987.
"Common trends, the government's budget constraint, and revenue smoothing,"
Working Papers in Applied Economic Theory
87-11, Federal Reserve Bank of San Francisco.
- Trehan, Bharat & Walsh, Carl E., 1988. "Common trends, the government's budget constraint, and revenue smoothing," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 425-444.
- Alesina, A. & Londregan, J.A. & Rosenthal, H., 1990.
"A Model Of The Political Economy Of The United States,"
GSIA Working Papers
1990-27, Carnegie Mellon University, Tepper School of Business.
- Alberto Alesina & John Londregan & Howard Rosenthal, 1991. "A Model of the Political Economy of the United States," NBER Working Papers 3611, National Bureau of Economic Research, Inc.
- Ray C. Fair, 1976.
"The Effects of Economic Events on Votes for President,"
Cowles Foundation Discussion Papers
418, Cowles Foundation for Research in Economics, Yale University.
- Fair, Ray C, 1978. "The Effect of Economic Events on Votes for President," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 159-73, May.
- Gary Chamberlain, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 225-238.
When requesting a correction, please mention this item's handle: RePEc:boc:bocoec:578. 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: (Christopher F Baum)
If references are entirely missing, you can add them using this form.