Fiscal Talks: Parliamentary Debates and Government Expenditure

Bernd Hayo and Johannes Zahner
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Johannes Zahner: Marburg Center for Institutional Economics and Sustainability (MACIES), Philipps-Universität Marburg; Chair of Macroeconomics and Finance, Goethe University Frankfurt

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: We investigate the relationship between parliamentary debates and public expenditure by mapping legislative speeches to fiscally relevant topics and examining their connection in both long-term trends and short-term adjustments. Our analysis draws on transcripts of federal legislative discussions and federal government spending data in Germany (1950–2020), classified into nine policy functions (e.g. Social Security, National Defence and Education). We apply a state-of-the-art natural language processing technique – a structural topic model – to match identified debate topics to corresponding spending functions. Using cointegration analysis and error-correction models, we find (i) significant long-term equilibria between parliamentary debates and corresponding fiscal expenditure and (ii) that in cases of short-term disequilibrium, adjustments occur through government expenditure; that is, parliamentary debates are weakly exogenous.

Keywords: Fiscal expenditure; parliamentary debate; Bundestag; text analysis; structural topic model; error-correction model (search for similar items in EconPapers)
JEL-codes: C32 D78 E62 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2025-10-06
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Working Paper: Fiscal talks: Parliamentary debates and government expenditure (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202521

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