Electoral System and Public Spending

By Roberto Perotti, Massimo V. Rostagno, Gian M Milesi-Ferretti

March 1, 2001

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Roberto Perotti, Massimo V. Rostagno, and Gian M Milesi-Ferretti. Electoral System and Public Spending, (USA: International Monetary Fund, 2001) accessed December 25, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We study the effects of electoral institutions on the size and composition of public expenditure in OECD and Latin American countries. We present a model emphasizing the distinction between purchases of goods and services, which are easier to target geographically, and transfers, which are easier to target across social groups. Voters have an incentive to elect representatives more prone to transfer spending in proportional systems. The model also predicts higher primary spending in proportional systems when the share of transfer spending is high. After defining rigorous measures of proportionality, we find considerable empirical support for our predictions.

Subject: Expenditure, Fiscal policy, Legal support in revenue administration, Revenue administration, Total expenditures

Keywords: Electoral rules, Electoral system, GDP ratio, GDP regression, Government budget constraint, Government formation, Latin American country, Least squares, Legal support in revenue administration, OECD government, Party vote, Proportionality, Public spending, Southern Europe, Total expenditures, Transfer spending, Transfers, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/022
Stock No:

WPIEA0222001
ISBN:

9781451843972
ISSN:

1018-5941

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