Politischer Opportunismus und Haushaltsdefizite in den westdeutschen Bundesländern

This article analyzes fiscal political business cycles in the West-German Länder. By linking the theory of political business cycles with the insights of the theory of economic voting, I argue that the German Länder governments do not have an incentive to raise the budget deficit in order to signal economic competence to the electorate. Despite having an incentive to spend more before an election in order to provide public goods to the voters, governments cannot finance the supply of public goods with higher deficits because voters prefer healthy fiscal policies. An empirical analysis of the West-German Länder between 1970 and 2003 bolsters the theoretical claims. A government that expands the deficit before an election thus experiences a loss in voter support. Consequently, governments tend to reduce the budget deficit in pre-election years.     

Elections and the strategic use of budget deficits

We present a model in which a conservative incumbent with preferences for low public spending can strategically run a budget deficit to prevent the left-wing opposition candidate from choosing high public spending if elected, and possibly also to ensure his own reelection. We find that the incumbent never manipulates the opposition candidate??s public spending if he can ensure his own reelection; and that a conservative incumbent who runs a budget deficit to ensure his reelection may somewhat paradoxically choose high public spending before the election.     

Who is Afraid of the Big Bad Debt? A Modern Money Theory Perspective on Federal Deficits and Debt

The U.S. federal government's deficit is expected to grow to over one trillion dollars in fiscal year (FY) 2020, and the national debt held by the public will likely grow to over $16.7 trillion. Budgeting scholars in the field of public administration have expressed concern over the increasing debt levels. The field of public administration, however, is largely unaware of Modern Money Theory (MMT) and the mechanics of money, which is its focus. MMT argues that understanding the mechanics of money in the U.S. financial system should lead scholars to different conclusions regarding the debt and deficit. This article presents the core arguments of the MMT perspective in this regard, with the goal to trigger further debates about debt and deficit among the community of budgeting scholars.     

Tax Structure and Public Spending - Or How the Electorate Is Deceived into Paying for Bigger Public Spending than It Really Wants

It is a classical proposition that tax structure may influence public spending. Two such propositions concerning the visibility and the elasticity of the tax system are tested. Visibility is not important while highly elastic tax systems are correlated with big public spending in times of economic boom. In times of economic decline and recession, high spending countries turn to deficit financing. In both cases big spenders seem to rely more upon a dose of fiscal illusion than moderate spenders.     

Pension Reform and the Fiscal Policy Stance

The increased budget deficit caused by the privatization of a public pension plan does not imply a relaxation of the stance of fiscal policy. The reform's impact on the fiscal stance and national saving depends primarily on its effect on the sum of explicit and implicit public debt and on the postreform payroll tax and private system contribution rates. Its impact also depends on the difference between the rate of interest on implicit and that on explicit public debt, among other influences. Pension privatization, if not offset by fiscal consolidation, can loosen the fiscal stance in some circumstances.     

Making Austerity Popular: The Media and Mass Attitudes toward Fiscal Policy

What explains variation in individual attitudes toward government deficits? Although macroeconomic stance is of paramount importance for contemporary governments, our understanding of its popular politics is limited. We argue that popular attitudes regarding austerity are influenced by media (and wider elite) framing. Information necessary to form preferences on the deficit is not provided neutrally, and its provision shapes how voters understand their interests. A wide range of evidence from Britain between 2010 and 2015 supports this claim. In the British Election Study, deficit attitudes vary systematically with the source of news consumption, even controlling for party identification. A structural topic model of two major newspapers' reporting shows that content varies systematically with respect to coverage of public borrowing—in ways that intuitively accord with the attitudes of their readership. Finally, a survey experiment suggests causation from media to attitudes: deficit preferences change based on the presentation of deficit information.     

Do elections affect the composition of fiscal policy in?developed, established democracies?

This paper investigates the impact of elections on the level and composition of fiscal instruments using a sample of 19 high-income OECD democracies during the period 1972–1999. We find that elections shift public spending towards current expenditures at the cost of public investment. Although we find no evidence for an electoral cycle for government deficit and overall expenditures, we find a negative effect of elections on revenue attributed to a fall in direct taxation. Our results apply for predetermined electoral periods while endogenous elections seem to increase deficit and leave the composition of fiscal policy unaffected.     

Explaining Fiscal Balances with a Simultaneous Equation Model of Revenue and Expenditure: A Case Study of Swiss Cantons Using Panel Data

Empirical literature on the analysis of the efficiency of measures for reducing persistent government deficits has mainly focused on the direct explanation of deficit. By contrast, this paper aims at modeling government revenue and expenditure within a simultaneous framework and deriving the fiscal balance (surplus or deficit) equation as the difference between the two variables. This setting enables one to not only judge how relevant the explanatory variables are in explaining the fiscal balance but also understand their impact on revenue and/or expenditure. Our empirical results, obtained by using a panel data set on Swiss Cantons for the period 1980–2002, confirm the relevance of the approach followed here, by providing unambiguous evidence of a simultaneous relationship between revenue and expenditure. They also reveal strong dynamic components in revenue, expenditure, and fiscal balance. Among the significant determinants of public fiscal balance we not only find the usual business cycle elements, but also and more importantly institutional factors such as the number of administrative units, and the ease with which people can resort to political (direct democracy) instruments, such as public initiatives and referendum.     

Government Partisanship and Managing the Economy: Japan and Sweden in Comparative Perspective

It is generally taken for granted that countries governed by leftist governments expand social policies and have an affinity for active fiscal policy that implies higher tolerance of deficit‐ridden budgets. In contrast, conservative governments are taken to be less likely to favor welfare expansion, especially when it has negative fiscal consequences. We challenge this conventional wisdom by comparing the reactions of the Swedish and Japanese governments to economic crises during the 1990s. The puzzle is that the Social Democratic governments in Sweden were able to reduce ballooning budget deficits and thus bring the economy back into balance, while still having one of the largest public sectors in the developed world. In contrast, the conservative Liberal Democratic Party governments in Japan have been unable to redress their deficit problems despite having one of the smallest public sectors among the Organisation for Economic Co‐operation and Development countries. We argue that this can be explained by taking into consideration that governments’ tax and spending policies are influenced by bureaucratic structures and institutionally driven public beliefs. By comparing Japan and Sweden, we show how political parties actively seek to make their policy stances permanent by structuring taxation and expenditure policies to create institutionalized support for their policy preferences.     

Institutional reform and public attitudes toward EU decision making

In the face of the discourse about the democratic deficit and declining public support for the European Union (EU), institutionalist scholars have examined the roles of institutions in EU decision making and in particular the implications of the empowered European Parliament. Almost in isolation from this literature, prior research on public attitudes toward the EU has largely adopted utilitarian, identity and informational accounts that focus on individual-level attributes. By combining the insights from the institutional and behavioural literature, this article reports on a novel cross-national conjoint experiment designed to investigate multidimensionality of public attitudes by taking into account the specific roles of institutions and distinct stages in EU decision making. Analysing data from a large-scale experimental survey in 13 EU member states, the findings demonstrate how and to what extent the institutional design of EU decision making shapes public support. In particular, the study finds a general pattern of public consensus about preferred institutional reform regarding powers of proposal, adoption and voting among European citizens in different countries, but notable dissent about sanctioning powers. The results show that utilitarian and partisan considerations matter primarily for the sanctioning dimension in which many respondents in Austria, the Czech Republic, Denmark and Sweden prefer national courts to the Court of Justice of the EU.     

Government Accountability For Outsourced Services*

The effect of outsourcing on government accountability for public services continues to be contested. Analysts point to an accountability deficit while governments insist that accountability is retained (and indeed improved). The existence of an accountability deficit is confirmed, using examples from the Commonwealth Job Network. The government claim, that accountability remains, is best interpreted as rhetorical, as a refusal to shift blame to private contractors, even though some channels of accountability may be weakened. The claim can be seen as evidence of an increasing incorporation of private contractors into the overall structure of government.     

Elite-public interaction on twitter: EU issue expansion in the campaign

Why do some issues receive more interest from the public, while others do not? This paper develops a theoretical and empirical approach that explains the degree to which issues expand from the elite to the public. We examine how candidates in the 2014 European Parliament elections talked about EU issues, in comparison to other political issues. We rely on data collected from Twitter and use a combination of human coding and machine learning to analyse what facilitates interactions from the public. We find that most political actors did not try to engage with the public about EU issues, and lack of engagement results in less interactions from the general public. Our findings contribute to understanding why EU issues still play a secondary role in European politics, but at the same time highlight what low-cost communicational tools might be useful to overcome this expansion deficit.     

Theorizing Implementation of Public Management Policy Reforms: A Case Study of Strategic Planning and Programming in the European Commission

As a measure to rectify the European Commission's "management deficit," the institution's authorities decided to introduce new forms of commission-wide strategic planning and programming in 2000. Drawing on semistructured interviews with Commission officials, this article tracks the key turning points, trajectories, and outcomes of events within the implementation stage of this part of the Commission managerial reform. As an instrumental case study, the article begins to theorize the process of implementing public management policy change. Major conceptual issues addressed include how reform decisions serve to activate the social mechanism of actor certification and how actor conduct amplifies such certification. Actor certification provides a link from reform choices to organizational change. In this respect and others, the research argument contrasts and integrates social theory mind-sets deriving from institutionalism and social interactionism (processualism) in line with research trends in historical sociology, organization science, and public management.     

Transparency of Risk and Reward in U.K. Public–Private Partnerships

Public–Private Partnerships (PPPs) are an increasingly common mechanism for the renewal of public sector infrastructure, although in the United Kingdom, these have been criticized as representing poor value for money. An inherent assumption of much of this criticism is that a corollary of detriment for the public sector is benefit for the private sector. This paper highlights the difficulty of objectively verifying the many criticisms and assumptions regarding risk and reward associated with PPPs. Public and private sector disclosure policies and systems are analyzed and we conclude that neither sector practices openness and transparency. This results in a democratic accountability deficit in the public sector and a lack of meaningful data being made available to stakeholders in private companies.     

Inflationary effects of oil price shocks in Indian economy

Stabilising inflation around certain preconceived level remains the predominant objective of monetary authorities all over the world as its variability has crucial ramifications on the real economy. However, the effective operation of monetary policy to this end largely hinges on the nature and dynamics of inflation both in the short‐run and long‐run. In this context, the present study focuses on theoretical investigation of how crude oil price fluctuations affect inflation in a real economy. Moreover, the study examines the nature of relationship between crude oil price fluctuations and inflation and its impact with reference to Indian economy. The study suggest that, in India, although the price of petroleum products are insulated against international crude oil price fluctuations by way of subsidies in order to curb inflation, in the long run, inflation manifest itself in the form of worsening fiscal deficit and undermine the sustainability of public debt. Copyright © 2016 John Wiley & Sons, Ltd.     

An Investigation of the Public Deficts and Government Spending Relationship: Evidence for Greece

This paper tests the validity of the Buchanan-Wagner hypothesis for Greece, that increases in public spending are the result of the tolerance of large deficits over the period 1961–1994. To test this hypothesis, three unit-root pretests, the Dickey-Fuller, Phillips-Perron and Kwiatkowski et al. and maximum likelihood estimation techniques of cointegrating vectors and a vector error-correction model are employed. A long-run relationship is found to exist among government spending, deficit, income,wages and adult population and the importance of short-run deviations are presented. The empirical evidence suggests that Buchanan and Wagner hypothesis, seems to find support for Greece in the long-run and the short-run. Further, productivity in the public sector is lower than in the private sector and the growth of income is not an important determinant of the increase in the relative size of public spending.     

What Does Corruption Mean in a Democracy?

Despite a growing interest in corruption, the topic has been absent from democratic theory. The reason is not a lack of normative issues, but rather missing links between the concepts of corruption and democracy. With few exceptions, political corruption has been conceived as departures by public officials from public rules, norms, and laws for the sake of private gain. Such a conception works well within bureaucratic contexts with well-defined offices, purposes, and norms of conduct. But it inadequately identifies corruption in political contexts, that is, the processes of contestation through which common purposes, norms, and rules are created. Corruption in a democracy, I argue, involves duplicitous violations of the democratic norm of inclusion. Such a conception encompasses the standard conception while complementing it with attention to the dynamics of inclusion and exclusion within democratic politics. By distinguishing the meanings of inclusion and exclusion within the many institutions, spheres, and associations that constitute contemporary democracies, I provide a democratic conception of corruption with a number of implications. The most important of these is that corruption in a democracy usually indicates a deficit of democracy.     

State strategies for welfare reform: The Wisconsin story

Wisconsin is commonly cited as exemplar of the capability of states for reforming welfare. Wisconsin's welfare and caseload declined 22.5 percent between 1986 and 1994. I argue that the decline resulted from restriction of eligibility and benefits, a strong state economy, and large expenditures on welfare-to-work programs encouraged by an exceptional fiscal bargain with the federal government. Continued reduction of welfare utilization by means other than denying access are jeopardized by proposed changes in federal cost-sharing, a prospective state deficit, and the growing share of the caseload accounted for by residents of Milwaukee. Wisconsin Works, the state's plan for public assistance in a post-block grant world, continues benefit reduction and eligibility restriction but expands emphasis on employment. The special circumstances enjoyed by Wisconsin are unlikely to be duplicated elsewhere.     

The Democratic Deficit in the States

We study how well states translate public opinion into policy. Using national surveys and advances in subnational opinion estimation, we estimate state‐level support for 39 policies across eight issue areas, including abortion, law enforcement, health care, and education. We show that policy is highly responsive to policy‐specific opinion, even controlling for other influences. But we also uncover a striking “democratic deficit”: policy is congruent with majority will only half the time. The analysis considers the influence of institutions, salience, partisan control of government, and interest groups on the magnitude and ideological direction of this democratic deficit. We find the largest influences to be legislative professionalization, term limits, and issue salience. Partisanship and interest groups affect the ideological balance of incongruence more than the aggregate degree thereof. Finally, policy is overresponsive to ideology and party—leading policy to be polarized relative to state electorates.     

Which among twin deficits hypothesis,twin divergence,and Ricardian's equivalence hold in a developing country?

South Africa witnesses the perpetual increase in budget deficit that hampers its ability for inclusive economic growth while on the other hand facing trade balance instability. To realise stability in the economy and sustainable yet inclusive economic growth, the two deficits, namely, budget and trade deficits, should be closely monitored. The study examined the empirical relationship between budget deficit and trade deficit in South Africa in the postapartheid era, employing time series data from 1994 to 2016. The autoregressive distribution lag approach was employed to examine the existence of a cointegration between the set of variables, both in the short‐ and the long‐run relationships and together with the error correction model. It was found that there is a significant and positive relationship between budget deficit and trade deficit in the short run. However, in the long run, the Ricardian's equivalence holds in South Africa. The study recommends that policies aimed at reducing budget and trade deficits should take into account inflation and aim to increase some macroeconomic variables such as fixed investment to ultimately achieve sustainable economic growth.