Cabinet Durability and Fiscal Discipline

We argue that short government durations in parliamentary democracies increase public spending by driving a political budget cycle. We present a revision of the standard political budget cycle model that relaxes the common (often implicit) assumption that election timing is fixed and known in advance. Instead, we allow cabinets to form expectations about their durability and use these expectations to inform their spending choices. The model predicts that (1) cabinets should spend more as their expected term in office draws to a close and (2) cabinets that outlive their expected duration should run higher deficits. Using data from 15 European democracies over several decades, we show that governments increase spending as their expected duration withers and run higher deficits as they surpass their forecasted life expectancy.

• Publication year

  2018

• Venue

  American Political Science Review

• Publication date

  2018-09-05

• Fields of study

  Economics, Political Science

• Identifiers
  DOI 10.1017/S0003055418000436
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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