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Political Leaders Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries

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  • Bernd Hayo

    () (University of Marburg)

  • Florian Neumeier

    () (University of Marburg)

Abstract

This paper empirically analyses the relationship between political leaders socioeconomic backgrounds and public budget deficits utilising panel data on 21 OECD countries from 1980 to 2008. Building on sociological, as well as economic, research, we argue that the socioeconomic status of political decision-makers, i.e., presidents or prime ministers, is an important determinant of fiscal budget decisions. Our theory-consistent findings show that the tenures of lower-class leaders i.e., leaders of low socioeconomic status are associated with a deficit-to-GDP ratio which is 1.6 percentage points higher than that during tenures of upperclass leaders.

Suggested Citation

  • Bernd Hayo & Florian Neumeier, 2013. "Political Leaders Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries," MAGKS Papers on Economics 201308, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:201308
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    Cited by:

    1. Potrafke, Niklas, 2017. "Partisan politics: The empirical evidence from OECD panel studies," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 712-750.
    2. repec:kap:pubcho:v:171:y:2017:i:3:d:10.1007_s11127-017-0449-5 is not listed on IDEAS
    3. Florian Neumeier, 2015. "Do Businessmen Make Good Governors?," MAGKS Papers on Economics 201519, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität
      [Public Debt and Debt Mentality]
      ," MPRA Paper 79432, University Library of Munich, Germany.
    5. Oasis Kodila-Tedika & Martin Mulunda Kabange, 2016. "Age of politicians and Regulatory Reform," Working Papers 16/003, African Governance and Development Institute..
    6. Hayo, Bernd & Neumeier, Florian, 2017. "The (In)validity of the Ricardian equivalence theorem–findings from a representative German population survey," Journal of Macroeconomics, Elsevier, vol. 51(C), pages 162-174.
    7. Nicolas Gavoille, 2017. "Who are the ‘ghost’ MPs? Evidence from the French Parliament," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2017-03-ccr, Condorcet Center for political Economy.
    8. Fuchs, Andreas & Richert, Katharina, 2015. "Do Development Minister Characteristics Affect Aid Giving?," Working Papers 0604, University of Heidelberg, Department of Economics.

    More about this item

    Keywords

    Budget deficit; political leaders; socioeconomic status; time preference.;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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