Electoral System and Public Spending

Author/Editor:

Roberto Perotti ; Massimo V. Rostagno ; Gian M Milesi-Ferretti

Publication Date:

March 1, 2001

Electronic Access:

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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:

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.

Series:

Working Paper No. 2001/022

Subject:

Expenditure Fiscal policy Legal support in revenue administration Revenue administration Total expenditures

English

Publication Date:

March 1, 2001

ISBN/ISSN:

9781451843972/1018-5941

Stock No:

WPIEA0222001

Pages:

44

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