THE ECONOMIC POWER OF VETO PLAYERS – THE CONNECTION BETWEEN FISCAL POLICIES, AND POLITICAL SYSTEMS
Abstract
The present paper explores the correlation between political systems, and fiscal policies, focusing on those changes in fiscal policy that may be induced by modifications in the partisan structure of political systems, as compared to cross-sectional differences between constitutional systems. The government’s fiscal stance is studied chiefly as capital balances, rather than current flows. The theoretical model defines the possible appropriation of liquid assets in the public sector, starting from the basic fiscal equation. Empirical research consists of both a quantitative, econometric part, and qualitative case studies. Quantitative research allows concluding that political systems do differ as for the amount of liquid capital held by the public sector. Three broad clusters of countries are defined, regarding their political systems, and these clusters display a significant disparity as for their observable fiscal stance. Case studies sampled from those clusters lead to conclude that the amount of liquid assets held by the public sector changes in close correlation to political polarization. The main path open for future research is the question whether fiscal variables can indicate pre-emptively the emergence of political veto players, even before their official appearance in the partisan, or the constitutional structure.
References
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[2] Alesina, A., and Perotti, R. 1995a. Fiscal Expansions and Adjustments in OECD Countries. First version: April 1995, Revised: June 1995, Prepared for the Economic Policy Panel, April 1995.
[3] Alesina, A., and Perotti, R.. 1995b. Reducing Budget Deficits. May 1995, revised: September 1995, prepared for the conference “Growing Government Debt – International Experiences”, Stockholm, June 1995.
[4] Alesina, A., and Perotti, R. 1996. Fiscal Discipline and the Budget Process. American Economic Association Papers and Proceedings, Balanced – Budget Rules, 86(2): 401-407.
[5] Almond, A.G. 1956. Comparative Political Systems. The Journal of Politics, 18(3): 391 – 409.
[6] Arestis, P. 2009. New Consensus in Macroeconomics: A Critical Appraisal. The Levy Economics Institute and the University of Leeds, Working Paper No. 564.
[7] Arestis, P., and Sawyer, M. 2003. Reinventing Fiscal Policy. The Levy Economics Institute and the University of Leeds, Working Paper No. 381.
[8] Arnold, D. 2004. Pueblos indígenas y originarios de Bolivia. Hacia su soberanía y legitimidad electoral. Bolivia: Corte Nacional Electoral.
[9] Barro, R. 1990. Government spending in a simple model of endogenous growth. Journal of Political Economy, 98: 103-125.
[10] Barro, R.J. 1989. The Ricardian Approach to Budget Deficits. The Journal of Economic Perspectives, 3(2): 37 – 54.
[11] Barro, R.J. 1974. Are Government Bonds Net Wealth? Journal of Political Economy, 82: 1095 – 1117.
[12] Barro, R.J. 1979. On The Determination of the Public Debt. Journal of Political Economy, 87: 940 – 971.
[13] Barro, R.J. 1986. U.S. Deficits Since World War I. Scandinavian Journal of Economics, 88(1): 195 – 222.
[14] Barro, R.J. 1987. Government Spending, Interest Rates, Prices and Budget Deficits in the United Kingdom, 1701 – 1918. Journal of Monetary Economics, 20: 221 – 247.
[15] Barro, R.J. 1989. The Neoclassical Approach to Fiscal Policy. in: Barro, R.J. (ed.). 1989. Modern Business Cycle Theory. Cambridge, Harvard University Press.
[16] Bawn, K., and Rosenbluth, F. 2006. Short versus Long Coalitions: Electoral Accountability and the Size of the Public Sector. American Journal of Political Science, 50 (2): 251-265.
[17] Beck, T., Clarke, G., Groff, A., Keefer, P., and Walsh, P. 2001. New Tools in Comparative Political Economy: The Database of Political Institutions. The World Bank Economic Review, 15(1): 165–176.
[18] Braudel, F. 1981. Civilization and Capitalism Vol. I: The Structures of Everyday Life. rev.ed., English Translation, William Collins Sons & Co London and Harper & Row New York, ISBN 00216303 9
[19] Breznitz, D., and Ornston, D. 2013. The Revolutionary Power of Peripheral Agencies: Explaining Radical Policy Innovation in Finland and Israel. Comparative Political Studies, 46(10): 1219 – 1245.
[20] Buchanan, J. 1976. Barro on The Ricardian Equivalence Theorem. Journal of Political Economy, 84: 337 – 342.
[21] Dale, T., and Ball, I. 1996. Viewpoint: Reinventing Government in New Zealand. How core government functions benefited from market-type measurement. The World Bank Group, Note No. 97, October 1996
[22] Diamond, P. E. 1965. National Debt in a Neoclassical Growth Model. The American Economic Review, 55(5): 1126 – 1150.
[23] Eslava, M., Nupia, O. 2010. Political Fragmentation and Government Spending: Bringing Ideological Polarization into the Picture. Universidad de Los Andes, Facultad de Economia, Centro de Estudios sobre Desarollo Economico, ISSN 1657-5334
[24] Fraser, N. 1990. Rethinking the Public Sphere. A Contribution to the Critique of Actually Existing Democracy. Social Text, 25/26: 56-80.
[25] Getz, D., and Goldberg, I. 2015. Best Practices and Lessons Learned in ICT Sector Innovation: A Case Study of Israel. World Bank, World Development Report 2016, Digital Dividends, Background Paper
[26] Goldman, F., and Brashares, E. 1991. Performance and Accountability: Budget Reform in New Zealand. Public Budgeting and Finance, 11(4): 7585.
[27] Habermas, J. 1975. Legitimation Crisis. translated by T.McCarthy, Boston.
[28] Habermas, J. 1979. Communication and the Evolution of Society. translated by T.McCarthy, Boston.
[29] Habermas, J. 1996. Between Facts and Norms. Contributions to a Discourse Theory of Law and Democracy. MIT Press, Cambridge, Massachussets, translated by William Rehg, Second Printing
[30] Jensen, G. 2003. Zen and the Art of Budget Management: The New Zealand Treasure, Controlling Public Expenditure. Northampton MA: Edward Elgar, pp. 3056.
[31] Keefer, P. 2012. Database of Political Institutions: Changes and Variable Definitions. Development Research Group, The World Bank, December 2012
[32] King, R., and Rebelo, S. 1990. Public policy and economic growth: developing neoclassical implications. Journal of Political Economy, 98: 126-150.
[33] Kohl, B. 2010. Bolivia under Morales: A Work in Progress. Latin American Perspectives, 37: 107-122.
[34] Laserna, R. 2009. Decentralization, Local Initiatives, and Citizenship in Bolivia, 1994- 2004. in: Selee, Andrew, and Enrique Peruzzotti (eds.). Participatory Innovation and Representative Democracy in Latin America. Washington: Woodrow Wilson Center Press.
[35] Meade, J.E. 1958. Is the National Debt a Burden. Oxford Economic Papers, 10(2): 126 – 150.
[36] Modigliani, F. 1961. Long-Run Implications of Alternative Fiscal Policies and the Burden of the National Debt. Economic Journal, 71: 730 – 755.
[37] Mukherjee, B. 2003. Political Parties and the Size of Government in Multiparty Legislatures: Examining Cross-Country and Panel Data Evidence. Comparative Political Studies, 36(6): 699-728.
[38] O’Donell, G., Vargas C.J., and Lazzetta, O. 2004. The Quality of Democracy. Theory and Applications. Notre Dame: Notre Dame Press
[39] O’Driscoll, G.P. 1977. The Ricardian Nonequivalence Theorem. Journal of Political Economy, 85: 207 – 210.
[40] Piketty, T. 2013. Le capital au XXIe siècle. Editions du Seuil, Paris
[41] Postero, N. 2010. The struggle to create a radical democracy in Bolivia. Latin American Research Review, 45, pp. 59-78
[42] Roubini, N., and Sachs, J. 1989. Government Spending and Budget Deficits in the Industrialized Countries. Economic Policy, 8: 700-32
[43] Schick, A. 1998. A Contemporary Approach to Public Expenditure Management. World Bank Institute
[44] Schick, A. 1998. Why Most Developing Countries Should Not Try New Zealand's Reforms. The World Bank Research Observer, 13(1): 123-131.
[45] Schilling-Vacaflor, A. 2010. Bolivia’s New Constitution: Towards Participatory Democracy and Political Pluralism. GIGA Research Programme: Legitimacy and Efficiency of Political Systems, Working Paper no. 141
[46] Sraffa, P. 1951. The Works and Correspondence of David Ricardo. Volume IV. Pamphlets and Papers, 1815 – 1823, „Funding System”. Cambridge, Cambridge University Press
[47] Tsebelis, G. 2002. Veto players: How political institutions work. Princeton University Press.
[48] Turnovsky, S. 2000. Fiscal policy, elastic labour supply and endogenous growth. Journal of Monetary Economics, 45: 185-210.
[49] Van Cott, D. 2000. The Liquidation of the Past. The Politics of Diversity in Latin America. USA: University of Pittsburgh Press
[50] Weingast, B. 1981. Regulation, Reregulation, and Deregulation: The Political Foundations of Agency Clientele Relationships. Law and Contemporary Problems, 44(1): 147 – 177.
[51] Weingast, B. 1995. The Economic Role of Political Institutions: Market Preserving Federalism and Economic Development. The Journal of Law, Economics, and Organization, 11(1): 1 – 29.
[52] Weingast, B. R., Shepsle, K. A., and Johnsen, C. 1981. The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics. The Journal of Political Economy, 89(4): 642-664.
Published
2016-12-31
How to Cite
WASNIEWSK, Krzysztof.
THE ECONOMIC POWER OF VETO PLAYERS – THE CONNECTION BETWEEN FISCAL POLICIES, AND POLITICAL SYSTEMS.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 7, n. 2, p. 179-205, dec. 2016.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/1267>. Date accessed: 22 dec. 2024.
doi: https://doi.org/10.14505/tpref.v7.2(14).07.
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