Separation of Powers and the Budget Process

Elhanan Helpman and Gene Grossman

No 275696, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: We study budget formation in a model featuring separation of powers. In our model, the legislature designs a budget bill that can include a cap on total spending and ear- marked allocations to designated public projects. Each project provides random benfits to one of many interest groups. The legislature can delegate spending decisions to the executive, who can observe the productivity of all projects before choosing which to fund. However, the ruling coalition in the legislature and the executive serve different constituencies, so their interests are not perfectly aligned. We consider settings that differ in terms of the breadth and overlap in the constituencies of the two branches, and associate these with the political systems and circumstances under which they most naturally arise. Earmarks are more likely to occur when the executive serves broad interests, while a binding budget cap arises when the executive's constituency is more narrow than that of the powerful legislators.

Keywords: Financial Economics; Political Economy (search for similar items in EconPapers)
Pages: 29
Date: 2006-06
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Separation of powers and the budget process (2008)
Working Paper: Separation of Powers and the Budget Process (2006)
Working Paper: Separation of Powers and the Budget Process (2006)
Working Paper: Separation of Powers and the Budget Process (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275696

DOI: 10.22004/ag.econ.275696

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