The Economics and Politics of the Structure of Public Expenditure

The paper derives a complete system ofdemand equations for public consumptionexpenditures as the outcome of rationalbehaviour in a model where governmentmaximizes expected electoral support. Theallocation of expenditures is found todepend not only on the prices of publicservices and total expenditure and tosatisfy the constraints of demand theory,which have been the focus of attention ofprevious empirical studies of theallocation of public expenditures, but, inaddition, on the prices of privateconsumption goods, the distribution ofvoter incomes and the expected change invoter support from varying the levels ofpublic provision.