Political institutions and government spending behavior: theory and evidence from Iran

Purpose The purpose of this paper is to explore how the strength of political veto players affects the long-run credibility of economic institutions and how they jointly affect entrepreneurial activity. Design/methodology/approach The authors employ an annual panel covering 30 OECD countries from 1993 to 2011. Findings An error correction model identifies a positive and significant short-run effect on self-employment from large government spending at low levels of veto player strength. A static model conversely indicates that smaller government spending is positively associated with entrepreneurship at lower levels of veto player strength in the long run. Originality/value The authors are the first to explore the interaction of economic and political institutions in the development of entrepreneurship.

Download Full-text

POLITICAL AND ECONOMIC INSTITUTIONS AND HUMAN DEVELOPMENT: POST-COMMUNIST NATIONS

Global Economy Journal ◽

10.1142/s2194565920500062 ◽

2020 ◽

Vol 20 (01) ◽

pp. 2050006

Author(s):

ISMATILLA MARDANOV

Keyword(s):

Human Development ◽

Political Institutions ◽

Government Spending ◽

Social Systems ◽

External Validation ◽

Well Being ◽

Development Economic ◽

Economic Institutions ◽

The World ◽

Negative Effect

The literature has extensively investigated the relationships between country economic and political institutions and human well-being. I assume that economic institutions can be the determinants of human development and provide a more robust explanation of the latter under the influence of political institutions in the 2SLS instrumental variable estimation than in the ordinary least square (OLS) estimation. I also assume that most of the Post-Communist Nations (PCN) were transitioning their economic and social systems focusing on human development, among other critical reforms and programs. Data confirm this assumption for 22 countries out of 25. Results indicate that there were causal relationships between human development and business, monetary, and investment freedom, and freedom from corruption and government spending. Only government spending had a negative effect on human development. Economic, labor, trade, fiscal, and financial freedom were not endogenous variables with strong instruments. Therefore, these institutions did not have a stronger impact on human development. External validation of the estimates using data from the rest of the world confirms the results. All the mentioned economic institutions had a significant impact on human development in the rest of the world under the influence of the same instrumental variables: political rights, civil liberties, property rights, the median age of the population, and geographic location. Government spending again had a significant and negative effect on human development.

Download Full-text

The political economy of budget trade-offs

Journal of Public Policy ◽

10.1017/s0143814x18000326 ◽

2018 ◽

Vol 40 (1) ◽

pp. 25-50 ◽

Cited By ~ 3

Author(s):

Christopher Adolph ◽

Christian Breunig ◽

Chris Koski

Keyword(s):

Political Institutions ◽

Government Spending ◽

Compositional Data ◽

Economic Conditions ◽

Budget Cuts ◽

Policy Area ◽

Policy Borrowing ◽

American States ◽

Trade Offs ◽

Balanced Budget

AbstractBecause the American states operate under balanced budget requirements, increases in spending in one area typically entail equal and opposite budget cuts in other programs. The literature analysing the correlates of government spending by policy area has mostly ignored these trade-offs inherent to policymaking, failing to address one of the most politically interesting and important dimensions of fiscal policy. Borrowing from the statistical literature on compositional data, we present more appropriate and efficient methods that explicitly incorporate the budget constraint into models of spending by budget category. We apply these methods to eight categories of spending from the American states over the years 1984–2009 to reveal winners and losers in the scramble for government spending. Our findings show that partisan governments finance their distinct priorities by raiding spending items that the opposition prefers, while different political institutions, economic conditions and state demographics impose different trade-offs across the budget.

Download Full-text

The Influence of Children on Family Life Cycle Spending Behavior: Theory and Applications

Journal of Consumer Affairs ◽

10.1111/j.1745-6606.1988.tb00225.x ◽

1988 ◽

Vol 22 (2) ◽

pp. 220-248 ◽

Cited By ~ 18

Author(s):

ROBIN A. DOUTHITT ◽

JOANNE M. FEDYK

Keyword(s):

Life Cycle ◽

Family Life ◽

Family Life Cycle ◽

Behavior Theory ◽

Spending Behavior

Download Full-text

Political Institutions and the Distributional Consequences of Suffrage Extension

Political Studies ◽

10.1111/1467-9248.12193 ◽

2015 ◽

Vol 63 (1_suppl) ◽

pp. 55-72 ◽

Cited By ~ 6

Author(s):

Tarik Abou-Chadi ◽

Matthias Orlowski

Keyword(s):

Public Goods ◽

Political Institutions ◽

Government Spending ◽

Median Voter ◽

Empirical Support ◽

Electoral System ◽

Public Goods Provision ◽

Conditional Effects ◽

Veto Points ◽

Positive Effect

In this article, it is demonstrated that suffrage extension positively affects public goods provision and redistribution. This effect, however, depends on the political-institutional context within countries – namely the electoral system and the existence of veto points. Since they incentivise more targeted spending, majoritarian systems decrease the positive effect that suffrage extension has on public goods provision. The relocation of the median voter through suffrage extension does not lead to more redistribution where second chambers with veto rights reduce the power of the working class to induce policy change. Empirical support is provided for this argument by analysing the conditional effects of suffrage extension through difference-in-difference estimation utilising data on government spending and inheritance taxation in eleven Western European countries between 1880 and 1938. These findings emphasise the importance of taking into account political institutions when assessing the determinants and consequences of democratisation.

Download Full-text