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Do Leaders Affect Government Spending Priorities?

Author

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  • Adi Brender
  • Allan Drazen

Abstract

Since a key function of competitive elections is to allow voters to express their policy preferences, one might take it for granted that when leadership changes, policy change follows. Using a dataset we created on the composition of central government expenditures in a panel of 71 democracies over 1972-2003, we test whether changes in leadership induce significant changes in one measure of policy - spending composition - as well as looking at the effect of other political and economic variables. We find that the replacement of a leader tends to have no significant effect on expenditure composition in the short-run. This remains true after controlling for a host of political and economic variables. However, over the medium-term leadership changes are associated with larger changes in expenditure composition, mostly in developed countries. We also find that in established democracies, election years are associated with larger changes in expenditure composition while new democracies, which were found by Brender and Drazen (2005) to raise their overall level of expenditures in election years, tend not to have such changes.

Suggested Citation

  • Adi Brender & Allan Drazen, 2010. "Do Leaders Affect Government Spending Priorities?," Carlo Alberto Notebooks 141, Collegio Carlo Alberto.
  • Handle: RePEc:cca:wpaper:141
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    File URL: http://www.carloalberto.org/assets/working-papers/no.141.pdf
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    References listed on IDEAS

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    1. Alcalde, Jose & Romero-Medina, Antonio, 2005. "Sequential decisions in the college admissions problem," Economics Letters, Elsevier, pages 153-158.
    2. Alcalde, Jose & Romero-Medina, Antonio, 2000. "Simple Mechanisms to Implement the Core of College Admissions Problems," Games and Economic Behavior, Elsevier, pages 294-302.
    3. Marilda Sotomayor, 2003. "Reaching the core of the marriage market through a non-revelation matching mechanism," International Journal of Game Theory, Springer;Game Theory Society, vol. 32(2), pages 241-251, December.
    4. Martinez, Ruth & Masso, Jordi & Neme, Alejandro & Oviedo, Jorge, 2000. "Single Agents and the Set of Many-to-One Stable Matchings," Journal of Economic Theory, Elsevier, vol. 91(1), pages 91-105, March.
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    More about this item

    Keywords

    Budget; Political Leaders; Elections; Fiscal Policy; Expenditure Composition;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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