Economic, political, and institutional determinants of public deficits

• 成果类型: Article
• 署名作者: Woo, J
• 署名单位: Organisation for Economic Co-operation & Development (OECD); DePaul University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(01)00143-8
• 发表日期: 2003
• 页码: 387-426
• 关键词: public deficit; political instability; social polarization; income inequality; budgetary institution; sensitivity analysis; robust regression

摘要

We examine a large set of economic, sociopolitical, and institutional variables in a panel of 57 developed and developing countries over the period of 1970-1990 to derive robust conclusions about which variables are important in explaining cross-country differences in public sector deficits. Financial depth, income inequality, assassinations, cabinet size, and centralization of authority in budgetary decisions are found to be significant and robust determinants of public deficits. We also propose a working hypothesis and provide supporting econometric evidence: social polarization is important in explaining differences in fiscal outcomes across countries, yet its effects may be even more pronounced or suppressed, depending on the political and institutional structures through which social polarization is linked to the fiscal policy-making process. Indeed, effects on public deficits of the sociopolitical variables tend to be smaller in countries with better institutional arrangements. Conversely, the sociopolitical polarization has very strong effects on deficits in the presence of poor institutions. The results are confirmed by extensive robustness tests such as the sensitivity analysis and the robust estimation method. (C) 2001 Elsevier Science B.V. All rights reserved.