Electoral System and Public Spending

Roberto Perotti, Massimo Rostagno and Gian Maria Milesi-Ferretti ()

No 2001/022, IMF Working Papers from International Monetary Fund

Abstract: We study the effects of electoral institutions on the size and composition of public expenditure in OECD and Latin American countries. We present a model emphasizing the distinction between purchases of goods and services, which are easier to target geographically, and transfers, which are easier to target across social groups. Voters have an incentive to elect representatives more prone to transfer spending in proportional systems. The model also predicts higher primary spending in proportional systems when the share of transfer spending is high. After defining rigorous measures of proportionality, we find considerable empirical support for our predictions.

Keywords: WP; electoral system; least squares; electoral rules; proportionality; public spending; transfers; GDP ratio; Latin American country; party vote; OECD government; GDP regression; government budget constraint; transfer spending; government formation; Total expenditures; Legal support in revenue administration; Southern Europe (search for similar items in EconPapers)
Pages: 44
Date: 2001-03-01
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Citations: View citations in EconPapers (6)

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Journal Article: Electoral Systems and Public Spending (2002)
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