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Government ideology and fiscal consolidation where and when do government parties adjust public spending? Helmut Herwartz, Bernd Theile

By: Herwartz, Helmut.
Contributor(s): Theile, Bernd.
Material type: ArticleArticlePublisher: 2021Subject(s): GASTO PUBLICO | PARTIDOS POLITICOS | IDEOLOGIAS | POLITICA FISCAL | CONSOLIDACION | MODELOS ECONOMETRICOS In: Public Choice v. 187, n. 3-4, June 2021, p. 375-401Summary: Recent studies indicate that the ideological stances of government parties no are longer associated with differences in total government spending. At the same time, we observe that political polarization over spending policies has deepened. This paper addresses that puzzle by analyzing government spending behavior for ten expenditure categories during both ‘normal’ times and periods of fiscal consolidation between 1995 and 2015 for 16 OECD countries. Our results indicate that partisan motives prevail in ‘normal’ times: rightwing cabinets spend more on defense and less on education and environmental protection than left-wing governments. On the other hand, in periods of fiscal adjustment, differences between left- and right-wing government expenditures can be observed mostly in different budget categories.
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Recent studies indicate that the ideological stances of government parties no are longer associated with differences in total government spending. At the same time, we observe that political polarization over spending policies has deepened. This paper addresses that puzzle by analyzing government spending behavior for ten expenditure categories during both ‘normal’ times and periods of fiscal consolidation between 1995 and 2015 for 16 OECD countries. Our results indicate that partisan motives prevail in ‘normal’ times: rightwing cabinets spend more on defense and less on education and environmental protection than left-wing governments. On the other hand, in periods of fiscal adjustment, differences between left- and right-wing government expenditures can be observed mostly in different budget categories.

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