Politics, Government Size, and Fiscal Adjustment in Industrial Countries
IMF Working Papers, September 1, 2002
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- Politics, Government Size, and Fiscal Adjustment in Industrial Countries
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Bibliographic details
- Authors: Anthony M Annett
- Published: September 1, 2002
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451857887.001
Summary and central findings
- Review establishes political and institutional factors matter for fiscal outcomes.
- Paper examines relationship between a variety of political-institutional variables and fiscal aggregates—encompassing the overall balance as well as expenditure and revenue and their various components—across 19 industrial countries over the past two decades.
- Finds strong effects on fiscal policy from:
- type of electoral system,
- degree of legislative or government fragmentation,
- stability of government.
- Some of the strongest results emerge for certain components of expenditure, such as transfers, and for the balance between labor and consumption taxation.
- Identifies clear relationships between the type of political system and choice of tax and expenditure system.
- Examines fiscal adjustment since the late 1980s in light of these political factors, finding some evidence of a reversal in trend, but only when growth has been high or when debt has become problematic.
Methodology and scope
- Cross-country examination covering 19 industrial countries.
- Time horizon described as the past two decades (relative to the paper).
- Focus on fiscal aggregates: overall balance, expenditure, revenue, and various components (including transfers, labor and consumption taxation).
Key policy-relevant implications and interpretation
- Political-institutional design (electoral system, fragmentation, government stability) has measurable effects on fiscal policy composition and outcomes.
- Components of public spending (notably transfers) and tax structure (labor versus consumption taxes) are particularly sensitive to political variables.
- Fiscal adjustment dynamics since the late 1980s are conditioned by macroeconomic context: reversals in adjustment trends are observed only under conditions of high growth or when debt becomes problematic.
Publication and metadata
- Author: Anthony M Annett
- Date: September 1, 2002
- Series: Working Paper No. 2002/162
- Issue: 162
- Volume: 2002
- Pages: 36
- DOI: https://doi.org/10.5089/9781451857887.001
- Stock No: WPIEA1622002
- ISBN: 9781451857887
- ISSN: 1018-5941
- Subjects: Expenditure, Fiscal consolidation, Fiscal policy, Labor, Labor taxes, Public sector wages, Taxes
- Keywords: electoral system, Europe, Fiscal consolidation, Fiscal Policy, Global, government change, government consumption, government fragmentation, government ideology, government instability, government stability, government wage, government weakness, Labor taxes, left wing government, Political Economy, public goods, Public sector wages, wage government consumption, WP
Source: IMF Working Paper "Politics, Government Size, and Fiscal Adjustment in Industrial Countries" by Anthony M Annett (Working Paper No. 2002/162).
Content in this bundle
- Politics, Government Size, and Fiscal Adjustment in Industrial Countries - WP/02/162