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Political Bias in Fiscal Policy Formation: an Econometric Analysis of Coalition Systems

Fabrizio Carmignani ()

No 28, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper provides a comprehensive econometric analysis of some debated issues concerning the political and institutional determinants of fiscal policy outcomes. Several innovative results are obtained. It turns out that a significant effect on fiscal policy formation can be traced back to the ideological orientation of the policymaker, to the degree of cabinet instability, to cross-country differences in electoral and budgetary institutions and to the dispersion of political power within the ruling coalition. Instead, the preferences of the median voter appear to have little importance. The evidence also rejects the theory of fiscal illusion in decision-making.

Keywords: Fiscal Policy; Policy-making; deficit (search for similar items in EconPapers)
JEL-codes: H60 E60 D70 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2000-12, Revised 2000-12
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Downloads: (external link) First version, 2000 (application/pdf)

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