Does Political Competition affect Fiscal Structure? What time series analysis says for Canada, 1870 - 2015

J. Stephen Ferris and Stanley Winer ()

No 17-12, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: This paper asks whether political competition has played a role in moderating the governance issues that arise in relation to Canada’s fiscal structure. By fiscal structure we mean three distinct but interrelated fiscal dimensions of the state: financial stability, long run size and short run interventions into the private economy, particularly with respect to the business cycle. The distinctiveness of this paper is that it focuses on four different measures of the degree of political competition: the size of the seat majority of the governing party in the House; the distribution of the volatility adjusted winning margins of the governing party; the proportion of electorally marginal constituencies adjusted for asymmetry; and the Przeworski-Sprague measure of electoral competitiveness at the constituency level. The analysis accounts for the differing time series properties of the political and economic variables and the comingling of long and short term fiscal policies in the time series data while finding support for the hypotheses that greater political competition will enhance fiscal stability (maintain a non-accelerating debt to GDP ratio), that government size will converge from above on economic and structural fundamentals and that period deficits/surpluses will align better with the business cycle. The potential impact of greater political competition is analyzed by applying the deficit model to the period of fiscal instability that arose in the 1980’s. Classification- H1, H3, H5

Keywords: political competition; fiscal stability; government size; ARDL models (search for similar items in EconPapers)
Pages: 45 pages
Date: 2017-11-02
New Economics Papers: this item is included in nep-pol
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published: Carleton Economic Papers

Downloads: (external link)
http://www.carleton.ca/economics/wp-content/uploads/cep17-12.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:car:carecp:17-12

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Carleton Economic Papers from Carleton University, Department of Economics C870 Loeb Building, 1125 Colonel By Drive, Ottawa Ontario, K1S 5B6 Canada.
Bibliographic data for series maintained by Court Lindsay ().