Do Budgetary Institutions Mitigate the Common Pool Problem?
Haan, Jakob de
Mierau, Jochen O.
- Working Paper
Rights / licenseIn Copyright - Non-Commercial Use Permitted
We analyze how budgetary institutions affect government budget deficits in member states of the European Union during 1984-2003 employing new indicators provided by Hallerberg et al. (2009). Using panel fixed effects models, we examine whether the impact of budgetary institutions on budget deficits is conditioned by political fragmentation (i.e., ideological differences among parties in government) and size fragmentation (i.e., the effective number of parties in government or the number of spending ministers). Our results suggest that strong budgetary institutions, no matter whether they are based on delegation to a strong minister of finance or on fiscal contracts, reduce the deficit bias in case of strong ideological fragmentation. In contrast, the impact of budgetary institutions is not conditioned by size fragmentation. Show more
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Journal / seriesKOF Working Papers
PublisherKOF Swiss Economic Institute, ETH Zurich
Edition / versionAdapted version May 2012
SubjectREGION OF THE EUROPEAN UNION; Size fragmentation; POLITICAL INFLUENCE (INTERNAL POLITICS); ÖFFENTLICHE HAUSHALTE (ÖFFENTLICHE FINANZEN); POLITISCHE EINFLUSSNAHME (INNENPOLITIK); Political fragmentation; REGION DER EUROPÄISCHEN UNION; PUBLIC BUDGETS (PUBLIC FINANCE); Budgetary institutions; Fiscal policy
Organisational unit03716 - Sturm, Jan-Egbert / Sturm, Jan-Egbert
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
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