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Political models of budget deficits: a literature review

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  • Maria Manuel Pinho

    (Faculdade de Economia da Universidade do Porto)

Abstract

Economic literature on the explanation of public deficits has been focusing on two main issues. On one hand, the accumulation of public debts in recent decades and, on the other hand, the large observed cross-countries differences on public deficits and debt. Economic arguments alone are not sufficient to explain this behavior. Therefore, recent political economy literature emphasizes the role of political and institutional factors in the explanation of the fiscal policy and, in particular, of the budget balances behavior. This paper surveys a set of political-economic models of budget deficits, providing an up-to-date, critical review of the main models. The main conclusion is the need of conducting more rigorous empirical tests.

Suggested Citation

  • Maria Manuel Pinho, 2004. "Political models of budget deficits: a literature review," FEP Working Papers 138, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:138
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    Cited by:

    1. Andreas Eisl, 2017. "Explaining Variation in Public Debt: A Quantitative Analysis of the Effects of Governance," Sciences Po publications 17/1, Sciences Po.
    2. Lavigne, Robert, 2011. "The political and institutional determinants of fiscal adjustment: Entering and exiting fiscal distress," European Journal of Political Economy, Elsevier, vol. 27(1), pages 17-35, March.
    3. Salih BARIŞIK & Abdullah BARIS, 2017. "Impact of governance on budget deficit in developing countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(611), S), pages 111-130, Summer.
    4. Florian Chatagny & Nils Soguel, 2012. "The effect of tax revenue budgeting errors on fiscal balance: evidence from the Swiss cantons," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 319-337, June.
    5. Andreas Eisl, 2017. "Explaining Variation in Public Debt," Working Papers hal-02187805, HAL.
    6. Eisl, Andreas, 2017. "Explaining variation in public debt: A quantitative analysis of the effects of governance," MaxPo Discussion Paper Series 17/1, Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo).
    7. Hakan HOTUNLUOĞLU & Recep TEKELİ, 2013. "Budget Deficits and Democracy: The Case of Turkey," Sosyoekonomi Journal, Sosyoekonomi Society, issue 19(19).
    8. Robert Lavigne, 2006. "The Institutional and Political Determinants of Fiscal Adjustment," Staff Working Papers 06-1, Bank of Canada.

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    Keywords

    budget deficits; public debt; political economy;
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