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Do Leaders Affect Government Spending Priorities?

Author

Listed:
  • Adi Brender
  • Allan Drazen
Abstract
Since a key function of competitive elections is to allow voters to express their policy preferences, one might take it for granted that when leadership changes, policy change follows. Using a dataset we created on the composition of central government expenditures in a panel of 71 democracies over 1972-2003, we test whether changes in leadership induce significant changes in one measure of policy - spending composition - as well as looking at the effect of other political and economic variables. We find that the replacement of a leader tends to have no significant effect on expenditure composition in the short-run. This remains true after controlling for a host of political and economic variables. However, over the medium-term leadership changes are associated with larger changes in expenditure composition, mostly in developed countries. We also find that in established democracies, election years are associated with larger changes in expenditure composition while new democracies, which were found by Brender and Drazen (2005) to raise their overall level of expenditures in election years, tend not to have such changes.

Suggested Citation

  • Adi Brender & Allan Drazen, 2010. "Do Leaders Affect Government Spending Priorities?," Carlo Alberto Notebooks 141, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:141
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    File URL: https://www.carloalberto.org/wp-content/uploads/2018/11/no.141.pdf
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    Cited by:

    1. Ziogas, Thanasis & Panagiotidis, Theodore, 2021. "Revisiting the political economy of fiscal adjustments," Journal of International Money and Finance, Elsevier, vol. 111(C).
    2. Margarita Katsimi & Vassilis Sarantides, 2012. "Do elections affect the composition of fiscal policy in developed, established democracies?," Public Choice, Springer, vol. 151(1), pages 325-362, April.
    3. Dominik Hecker & Dano Meiske & Niklas Potrafke & Marina Riem & Christoph Schinke, 2016. "Schuldenbremsen in den deutschen Bundesländern: Worte und Taten der Landesregierungen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(02), pages 14-22, January.
    4. Burke Paul J., 2012. "Economic Growth and Political Survival," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-43, March.
    5. Felipe Kast & Stephan Meier & Dina Pomeranz, 2012. "Under-Savers Anonymous: Evidence on Self-Help Groups and Peer Pressure as a Savings Commitment Device," NBER Working Papers 18417, National Bureau of Economic Research, Inc.
    6. Hayo, Bernd & Neumeier, Florian, 2014. "Political leaders' socioeconomic background and fiscal performance in Germany," European Journal of Political Economy, Elsevier, vol. 34(C), pages 184-205.
    7. Ming Lu & Lijun Xia & Jinchuan Xiao, 2019. "Pro‐social leadership under authoritarianism : Provincial leaders’ educational backgrounds and fiscal expenditure structure in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 27(1), pages 5-30, January.
    8. Niklas Potrafke & Marina Riem & Christoph Schinke, 2016. "Debt Brakes in the German States: Governments’ Rhetoric and Actions," German Economic Review, Verein für Socialpolitik, vol. 17(2), pages 253-275, May.
    9. Guangjun Shen, 2018. "Computer and Information Technology, Firm Growth, and Industrial Restructuring: Evidence from Manufacturing in the People's Republic of China," Asian Development Review, MIT Press, vol. 35(1), pages 133-154, March.
    10. Jeroen Klomp & Jakob de Haan, 2013. "Conditional Election and Partisan Cycles in Government Support to the Agricultural Sector: An Empirical Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(4), pages 793-818.
    11. Vojtěch Roženský, 2012. "Mandatorní výdaje a flexibilita fiskální politiky v ČR [Mandatory Expenditure and the Flexibility of Fiscal Policy in the Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2012(1), pages 40-57.
    12. Marcela Eslava, 2011. "The Political Economy Of Fiscal Deficits: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 25(4), pages 645-673, September.
    13. Niklas Potrafke, 2006. "Political Effects on the Allocation of Public Expenditures: Empirical Evidence from OECD Countries," Discussion Papers of DIW Berlin 653, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    Budget; Political Leaders; Elections; Fiscal Policy; Expenditure Composition;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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