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Legislative Organization of Fiscal Policy

W. Crain () and Timothy J Muris

Journal of Law and Economics, 1995, vol. 38, issue 2, 311-33

Abstract: In the voluminous literature on fiscal policy, there is little evidence about the impact of legislative organization on shaping fiscal decisions. By comparing different organizations of committee structure to control tax and spending policies, this article presents such evidence. Regarding spending, we test whether the dispersion of spending authority among multiple committees creates a problem similar to that of the "common pool." Using American state data, we find that when only one committee has the authority to spend, spending is restrained relative to when spending authority is balkanized. Regarding spending, we hypothesize that if a single committee controls not only all spending authority but also all taxation authority, that committee will have more incentive to tax than a committee that does not control spending; it can obtain the benefits of increased taxation more directly. Again, this proposition is supported by evidence at the state level. Copyright 1995 by the University of Chicago.

Date: 1995
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Handle: RePEc:ucp:jlawec:v:38:y:1995:i:2:p:311-33