The Downsian voter meets the ecological fallacy

This paper presents evidence that voter participation does not depend on the probability that one vote is decisive. An extensive summary of the empirical participation literature is provided which shows that most but not all studies have found that turnout in an electoral district is higher when the race is closer. Individual-level vote regressions for the 1979 and 1980 Canadian national elections are estimated using objective measures of closeness (as opposed to self-reported measures). The main finding is that a citizen is no more likely to vote in a close election than in a lands-lide election. District-level turnout regressions for the same elections are also estimated, and a significant relation between closeness and turnout is observed. This suggests that aggregation bias may generate a spurious closeness-turnout relation in district-level regressions.     

The electoral budget cycle

This article begins with a review of the now substantial literature on the thesis that polticians manipulate governmental outputs so as to favor their chances of reelection. It concludes that while this “electoral cycle” thesis was initially overstated by its proponents, it retains more plausibility than recent critics have allowed. This conclusion is then demonstrated through an analysis of expenditures by the ten provincial governments in Canada between 1951 and 1984.     

Modernizing the budget system: The Malaysian experience

Programme and performance budgeting (PPB) was first introduced in Malaysia in 1969 and experience with operating and developing the system carries lessons for other countries. The initial introduction under the influence of external advisers, involved treating PPB as a mechanical exercise in which right procedures had to be followed. From 1972 the strategy changed to making the system serve to assist with utilizing and managing resources more efficiently in relation to programme objectives. The successful development of the system agency by agency points first to the importance of local rather than foreign expertise; second, to the need for the agency head to be committed and involved, rather than leave the introduction and management of the system to lower level experts; and third to the significance of the leadership role of the Treasury.     

The balanced budget amendment: Clarifying the arguments

From the perspective of a supporter, this paper responds to the several criticisms that have been raised to the proposed constitutional amendment to require budget balance. Economists have concentrated on the loss of fiscal flexibility. This objection is countered by reference to the political inefficacy of attempted budgetary manipulation. Lawyers have concentrated on problems of enforcement. This objection is countered by reference to observed respect to other constitutional rules.     

The measurability of budget related rent-seeking

It has been suggested that the extent of rent-seeking expenditures arising from attempts to influence budget allocations should be estimated by the absolute magnitude of the observed changes in allocation. Instead, we argue that it is the extent of theex ante prospective changes that determine the level of rent-seeking, and that in the presence of countervailing activity these may be quite unrelated to the ex post observed values. We further argue that the traditional rent-seeking model of competition for a pre-specified rent is inappropriate in this context.     

The presence of moral hazard in budget breaking

It is possible that a budget breaking incentive scheme may not solve the problem of moral hazard in team production, due to an incentive for a principal to cheat on such an agreement. This is a problem common to incentive schemes which result in an unbalanced budget, which include among them processes designed to reveal demand for public goods. This paper shows the conditions under which cheating is possible, and designs a payment scheme for the principal which is free of any cheating incentive.     

Legislative budget cycles

Recent literature suggests that electoral budget cycles are a phenomenon of new rather than established democracies. What part of the democratization process explains the amelioration of the political budget cycle? We argue the answer lies (in part) in the development of a strong party system. We extend the classic Rogoff-Siebert model to show that political budget cycles are possible in a legislative context with rational voters. We then demonstrate that the development of a strong party system can restrain political budget cycles in a majoritarian electoral system. Finally, we follow prior work in using vote share volatility as a measure of the institutionalization of the party system. Using newly collected vote-share data for 433 elections for 90 democracies from 1980–2007, we calculate a measure of party institutionalization. We then use this data to demonstrate that institutionalized party systems are associated with mitigated political budget cycles, especially in majoritarian electoral systems.     

The political budget cycle across varying degrees of democracy

The political budget cycle (PBC) is a well-known theory claiming that leaders manipulate the economy in proximity to elections to improve their chances of re-election. While the existence of the phenomenon in democracies has been thoroughly discussed, little attention has been given to the theoretical justification and empirical evidence of its existence in autocracies. In this article, I present a hypothesis of the magnitude of the PBC in both autocracies and democracies, claiming that as the democracy level increases, the incentive of leaders to manipulate the economy rises, but their ability to do so is more limited. Therefore, I expect the magnitude of the PBC to be the lowest in states that are strongly autocratic (due to a lack of incentives) and in states that are strongly democratic (due to a lack of ability). The effect should be the strongest in weakly autocratic or weakly democratic states. The empirical analysis presented in the article supports the hypothesis of a non-linear correlation between the PBC and levels of democracy.     

Wildavsky on budget reform

A large part of the literature on budgeting in the United States is concerned with reform. The goals of proposed reforms are couched in similar language - economy, efficiency, improvement, or just better budgeting ... However, any effective change in budgetary relationships must necessarily alter the outcomes of the budgetary process. Otherwise, why bother? Far from being a neutral matter of better budgeting, proposed reforms inevitably contain important implications for the political system, that is, the who gets what of governmental decisions (Wildavsky, 1961: p. 186). ... budgeting is a subsystem of politics, not vise versa - because of the current tendency to overload budgeting. As much as I respect the importance of budgeting and the talents of budgeteers, to substitute budgeting for governing will not work (Wildavsky, 1992b: p. 439).     

A better budget rule

Debt limits, interest coverage ratios, one‐off balanced budget requirements, pay‐as‐you‐go rules, and tax and expenditure limits are among the most important fiscal rules for constraining intertemporal transfers. There is considerable evidence that the least costly and most effective of such rules are those that focus directly on the rate of spending growth, even with their seemingly ad hoc nature and possibilities for circumvention. In this paper, we use optimal control theory and martingale methods to justify a transparent, nonarbitrary rule governing maximum sustainable rate of spending growth, treating the revenue structure of a jurisdiction as a given continuous‐time stochastic process. Our results can be used to determine whether a proposed rate of spending growth is sustainable or not. © 2009 by the Association for Public Policy Analysis and Management     

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.     

Pressure and the division of a public budget

This paper considers the division of a public budget among competing interests. The planner determines the optimal allocation by maximizing a weighted social welfare function. These weights reflect society's attitudes to different recipient groups, and are not constrained to be constant. By exerting “pressure”, the recipients can attempt to manipulate the weights and hence influence the division of the budget. The amount of resources used on pressure, and the effects on the preference weights are calculated. An important parameter in the model is the elasticity of pressure, for which an appropriate estimate is presented from the case of competition for a share of a health services budget in Norway.