Document Type

Article

Publication Date

12-12-2007

Abstract

Why might a democratically elected government choose to run a sustained fiscal deficit in the face of many potential drawbacks? In this paper, I contribute in two important ways to our understanding of the political causes of fiscal outcomes. First, I develop a theoretical argument that democracies with a few large districts will have greater political incentives to provide balanced budgets than democracies with many small districts. Second, I test my theory (and, preliminarily, other theories) with a much broader empirical model than those generally used in the literature. The project helps bring to light the multidimensional impact of electoral proportionality on deficit spending, a theoretical development that has the potential to improve greatly our understanding of policy formation in a variety of areas. It also helps pull developing countries and diverse democratic institutions into a literature that has centered on explaining behavior in wealthy, parliamentary systems.

Comments

Working Paper (2007), pp. 2-40.

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