The effects of party competition on budget outcomes: Empirical evidence from local governments in Spain

This paper investigates the link between local budget outcomes and the intensity of party competition, measured as the margin of victory obtained by the incumbent in the previous local election (i.e. the difference between the vote share and 50%). Two competing hypotheses are tested in the paper. On the one hand, the Leviathan government hypothesis suggests that the lower the intensity of party competition is, the greater is the increase in the size of the local public sector, irrespective of the ideology of the party in power. On the other hand, the Partisan government hypothesis suggests that the incumbent will find it easier to advance its platform when intensity of competition is low (i.e., parties on the left/right will increase/decrease the size of the local public sector when the intensity of the challenge from the opposition is low). These hypotheses are tested with information on spending, own revenues and deficit for more than 500 Spanish local governments over 8 years (1992–1999), and information on the results of two local electoral contests (1991 and 1995). The evidence favors the Partisan hypothesis over the Leviathan one. We found that, for left-wing governments, spending, taxes and deficits increased as the electoral margin increases; whereas, for right-wing governments, a greater margin of victory led to reductions in all these variables.     

Habit formation, strategic extremism, and debt policy

We suggest a probabilistic voting model where voters’ preferences for alternative public goods display habit formation. Current policies determine habit levels and in turn the future preferences of the voters. This allows the incumbent to act strategically in order to influence the probability of reelection. Comparing to a benchmark case of a certain reelection, we demonstrate that the incumbent’s optimal policy features both a more polarized allocation between the alternative public goods and a debt bias.     

A test of the revealed-preference phenomenon in congressional elections

This study tests for the existence of a revealed-preference phenomenon in recent congressional elections. A revealed-preference analysis predicts that if candidate one defeats incumbent candidate two, then candidate one has been revealed preferred to candidate two, and can expect to secure higher pluralities in subsequent reelection contests than candidate two would have expected. I collect data on incumbents in 1946–1980 congressional elections to examine this prediction. The data provide qualified support for the presence of a revealed-preference phenomenon. The essay closes with a discussion of the possible connection between the revealed-preference phenomenon and the recent electoral experience of congressional incumbents.     

Fiscal policy and reelection in Brazilian municipalities

This paper uses a new panel of more than 2,000 Brazilian municipalities over 13 years to analyze the influence of public expenditures on the probability of mayors’ reelection. We examine Brazilian municipal elections from 1988 to 2000 using a logit fixed-effects model. The results suggest that mayors who spend more during their terms of office increase the probability of their own reelection or of a successor of the same political party. In particular, higher capital spending over the years preceding elections and current expenditures in election years are beneficial to Brazilian incumbent mayors.     

Two Roles for Elections: Disciplining the Incumbent and Selecting a Competent Candidate

This paper presents a political economy model in which the voterswant to control moral hazard on the part of the incumbent andselect a competent candidate to be in office. We focus on electionswhich take place repeatedly as the basic disciplinary and screeningmechanism. It is shown that incomplete information of the votersabout the (economic) competence of the incumbent helps to overcomethe lame duck effect of a government with foreseeable end. Asecond finding is that economic performance strongly influences thereelection of the incumbent. In particular, in (stationary perfectBayesian) equilibrium, if economic performance is bad, theincumbent will not be reelected. We also prove that having thepossibility of reelecting a government increases the welfare of thevoters to the no reelection benchmark.     

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.     

Separation of powers and political budget cycles

Political budget cycles (PBCs) arise when the electorate is imperfectly informed about the incumbent’s competence and the incumbent has discretion over the budget. Focusing on the second condition, we study how separation of powers affects PBCs in the composition of government spending. We find that the details of the budget process, namely, the bargaining rules, the status quo’s location, and the degree of compliance with the budget law, are critical for the existence and the amplitudes of PBCs. In particular, when the status quo is determined by the previous budget and there is high compliance with the budget law, separation of powers acts as a commitment device which solves the credibility problems that drive PBCs.     

Two-round elections, one-round determinants? Evidence from the French municipal elections

Using a new database of French municipalities that covers 821 towns and two elections (2001 and 2008), we examine how the budget structure, degree of electoral competition and the economic context affect the share of votes for the incumbent. We take into account the institutional details of the two-round structure of the electoral process created by French electoral rules (dual ballot under plurality rules). We show that in the first round of the electoral process, spending on equipment (including infrastructures) can influence the voter, and that electoral competition has a strong impact on the incumbent’s score. In the second round, the incumbent’s vote is affected more by national considerations and local budget variables have no effect. We show that the dynamics between the first and the second rounds are intense. The results suggest that the determinants of each round’s outcome in a two-round electoral process are different.     

Partisan schemas and economic voting: The federal budget deficit and the 1988 presidential election

This paper considers the issue of the budget deficit and its influence on the 1988 presidential election. Specifically, we are concerned with the role of partisan economic schemas, and the possibility that many voters might have supported the incumbent Republicansbecause of the deficit problem (reasoning that the GOP, regardless of the failures of the previous 8 years, was the best party to reduce government spending). We find that the deficit issue, despite its high salience, did not have an overwhelming impact on the 1988 race, but what effect it did have apparently favored the Republicans. We demonstrate that schematic voters concerned about the deficit were, indeed, more likely to support George Bush over Michael Dukakis. We conclude by discussing the importance and limits of partisan schemas in explaining economic voting.     

Character Weakness,Partisan Bias,and Presidential Evaluation: Modifications and Extensions

In a recent article Goren (American Journal of Political Science, 46, 627–641, 2002) draws upon theories of negativity bias, partisan bias, and motivated reasoning to posit that the more strongly people identify with the opposition party of a presidential candidate, the more heavily they will rely on character weakness impressions to construct global candidate evaluations. This paper modifies the theoretical framework by positing that (1) partisans will judge opposition nominees most critically on the traits owned by the former’s party and (2) partisan bias promotes negativity bias in the evaluation of incumbent presidents seeking reelection and incumbent vice presidents seeking the presidency. Analysis of data from the 2000 and 2004 NES surveys, along with a reconsideration of the results from the 1984 to 1996 period covered in the original piece, yields strong empirical support for these expectations.

Money,candidates, and mayoral elections

In this paper, we extend a well-trod line of research from congressional and state-level elections—the electoral impact of campaign expenditures and candidate characteristics—to a relatively understudied context, urban mayoral elections. Using a sample of large U.S. cities, we provide evidence that mayoral elections are very similar to elections at other levels of office: there is a tremendous incumbency advantage, one that is overcome only with great effort; campaign spending is closely tied to incumbent vote share but it is challenger rather than incumbent spending that seems to drive outcomes; and challengers are hopelessly outspent. In addition, we find that the effect of local economic conditions on incumbent success is mediated by challenger spending and that incumbent candidates fare better in racially diverse settings.     

Campaign spending and Senate elections, 1978–84

This paper uses a sample of recent Senate election results and estimates vote equations that show challenger spending hurts, and incumbent spending helps, incumbent re-election. While both types of spending have diminishing returns, the effects are asymmetrical. Challenger spending is more productive at lower levels of spending, but incumbents can spend greater amounts more profitably than can challengers. These results can explain why Senate incumbents spend money, why they typically outspend their challenger, and why incumbents who can outspend their challenger would tend to be against spending limits or public financing.However, the results do not explain why incumbent spending does not work in House election equations. Jacobson and others have run countless linear and quadratic specifications that persistently show perverse effects for incumbent spending. These results are not affected by the procedural problem of logging observations that have a value of zero, and pose a genuine puzzle. There are other empirical results suggesting the idea that there are basic differences in the nature of elections between the House and Senate. For example, Grier and Carlson (1988) find that state-level economic conditions have a strong effect on individual Senate elections, while Owens and Olson (1980) find that district-level economic conditions have no effect on House elections. Since I show that there are a significant number of elections where incumbent spending does matter, and that simultaneity bias may not be a tenable explanation for results where incumbent expenditures do not matter, it may be time to take a new look at the House data or to develop a testable theory that can explain persistant empirical differences in the determinants of elections in the House and Senate.     

Budgeting during a Recession Phase of the Business Cycle: The Georgia Experience

This article describes the impact of the nation-wide recession on Georgia revenue and spending decisions in the 2002 and 2003 fiscal years. The state's strong economy and conservative revenue estimating practices historically provided a hedge against revenue shortfalls during a recession phase of the business cycle. However, when state revenue collections for FY 2002 were 5 percent less than collections for the prior fiscal year, several gap-closing measures became necessary, including state agency spending reductions and substitution of bond proceeds for tax revenues. These revenue and expenditure gap-closing measures were intended to enable the governor to achieve his policy initiatives while maintaining a balanced budget. The state's Rainy Day Fund remained full and was held in reserve for budget balancing in FY 2004, if necessary. Budget balancing during the current recession has been made possible by the state's practice of not overcommitting to program increases and tax cuts during the expansion phase of the business cycle, and by effectively framing the issue of fiscal restraint.     

The Campaign Value of Incumbency: A New Solution to the Puzzle of Less Effective Incumbent Spending

A puzzle in research on campaign spending is that while expenditure is positively related to votes won, this effect is far more strongly, or even exclusively, enjoyed by challengers rather than by incumbents. We unearth a new explanation for the puzzle, focusing on the hidden, yet variable, campaign value of office perquisites which incumbents deploy in their campaigns to win votes. When these variable office benefits are unobserved, then the effect is to make observed incumbent spending less effective than spending by challengers. Using data from the 2002 Irish general election, where incumbency was assigned a variable campaign value and included in declared campaign spending, we are able to demonstrate this hidden incumbency effect and estimate its relationship to electoral success, in terms of overall votes, share of votes, and probability of winning a seat. Contrary to previous research showing ineffective incumbent spending, we find that when the campaign value of office is also measured, public office value “spending” is not only very effective in winning votes, but also seems to be more effective than regular incumbent spending.     

Spending Preferences of Public Sector Officials: Survey Evidence from Finland

We examine the determinants that shape the spending preferences of public sector officials on several budgetary appropriations. Following Niskanen's budget‐maximizing theory, we test whether these officials prefer larger budgetary appropriations rather than less. We measure their preferences to increase their own bureau's appropriations and compare those against their preferences for other bureaus' appropriations. The empirical evidence is gathered via a mail survey targeting high‐level officials from different ministries in Finland. The analysis of the responses suggests that Niskanen's theory is in part supported.     

The 1984 election as Anthony downs and Stanley Kelley might interpret it

This paper is an analysis of two rational choice theories of elections. Anthony Downs and Stanley Kelley's theories yield complementary interpretations of the 1984 U. S. election. Reagan's victory was based on both prospective and retrospective judgments as well as on candidate and policy considerations. Reagan won that element of an incumbent's reelection that is a referendum on his performance as president. However, people also voted on the basis of domestic and foreign policy preferences for the second term. On these issues voters preferred Mondale as much as Reagan. Reagan's victory owed remarkably little to his conservative agenda and to a warm regard for his personal qualities as a leader. His landslide was deceptive. The two Reagan victories were among the weakest of the six landslides of the postwar period by Kelley's test of decisiveness. The Reagan elections have not set the United States on the course of a long-term conservative agenda in either domestic or foreign affairs.     

Policy Responsiveness and Incumbent Reelection in State Legislatures

Does policy responsiveness on the part of incumbent legislators affect their prospects for reelection? Recent studies of congressional campaigns demonstrate that incumbents who support policies that are more congruent with their constituents' preferences face fewer reelection obstacles. The present analysis considers this question in state legislative elections where voter knowledge of legislator activities is generally quite low. The findings demonstrate that incumbents positioned farther from the average citizen and toward their party's base are only slightly more likely to be challenged than other incumbents. However, more partisan voting incumbents do attract challengers capable of raising and spending larger amounts of money. Interestingly, incumbents positioned closer to their party's base actually receive a greater share of the vote in most contested elections. Only when challengers spend significant amounts of money do we see the positive effects of partisan voting by incumbents diminished. Overall, these findings demonstrate the mechanisms by which policy positions of incumbents in a low‐information environment affect the challengers that emerge and the level of voter support received.     

Liberal and conservative dissensus in areas of domestic public policy other than business and economics

This research is part of a project that examines the nature of political ideology in the United States and its impact on the formulation of public policy. Here we explore the bases of liberal – conservative dissensus in areas of domestic policy other than business and the economy using a model developed by Janda, Berry, and Goldman. We find that the major elements of dissensus are: a strong conservative disposition to defend order; with a few exceptions a liberal indifference to order as conservatives define it; conservative opposition to the expansion of federal power over states or individuals and/or expansion in federal (and often state and local government) spending unless order is threatened; much greater liberal emphasis on equality; and varying conceptualizations of basic values to the degree that liberals and conservatives seem almost to be talking past each other using two different languages.     

The Evolution of Federal Spending Controls: A Brief Overview

This article reviews spending controls in the federal government over the past two decades. During this period, federal spending has grown significantly, despite budgetary controls. The article discusses various Impoundment Control acts throughout this time period with a focus on the Gramm-Rudman-Hollings Act of 1985 and the budget reforms of the 1990s. The article also gives an overview of whether current spending and deficit control procedures are inadequate and, if so, what stronger measures may be adopted.     

Competition of Politicians for Incentive Contracts and Elections

When politicians are short-term oriented or future elections do not sufficiently reflect the success of past policies, democratic elections cannot motivate politicians to undertake long-term socially beneficial projects. When politicians can offer incentive contracts which become effective upon reelection, the hierarchy of contracts and elections can alleviate such inefficient decision-making in politics. This mechanism still works if the public cannot commit itself to a reelection scheme or if the public is unsure about the politicians’ time preferences. In the non-commitment case, incentive contracts may need to include a golden parachute clause.