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Can Budget Institutions Counteract Political Indiscipline?

Author/Editor: Fabrizio, Stefania | Mody, Ashoka
Authorized for Distribution: May 1, 2006
Electronic Access: Free Full Text (PDF file size is 611KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: The budget is an expression of political rather than economic priorities. We confirm this proposition for a group of new and potential members of the European Union, finding that politics dominates. The contemporary practice of democracy can increase budget deficits through not only ideological preferences but also more fragmented government coalitions and higher voter participation. Long-term structural forces, triggered by societal divisions and representative electoral rules, have more ambiguous implications but also appear to increase budget pressures, as others have also found. However, our most robust, and hopeful, finding is that budget institutions-mechanisms and rules of the budget process-that create checks and balances have significant value even when the politics is representative but undisciplined, and when long-term structural forces are unfavorable.
 
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Series: Working Paper No. 06/123
Subject(s): Fiscal policy | Budgets | Budget deficits | Government expenditures | Political economy | Public finance | National budgets
Author's keyword(s): Fiscal policy | budget institutions | electoral rules | government fragmentation | government idealogy | ethnic fractionalization | voter turnover
 
English  
    Published:   May 1, 2006        
    ISBN/ISSN:   0 / 1934-7073   Format:   Paper
    Stock No:   WPIEA2006123   Pages:   53
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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