Fiscal Policy with Multiple Policymakers: Veto Actors and Deadlock; Collective Action and Common Pools; Bargaining and Compromise

Abstract

When considering the implications for fiscal-policy outcomes (especially deficits and debts) of the dispersion of policymaking authority across multiple actors, recent veto-actor scholarship has emphasized its potential to privilege the status quo and thus retard policy-adjustment rates. In similar contexts, however, others have stressed collective-action and common-pool issues that arise when multiple policymakers share authority over policies. Still others have highlighted the bargaining and compromise aspects of policymaking with multiple actors. This paper offers a synthetic discussion of these multifarious effects of the number and diversity of policymaking actors, thereby placing veto-actor considerations in broader theoretical context, and it offers an empirical approach to modeling these manifold effects distinctly and effectively. It then offers an initial exploration of this synthetic-theoretical and structured-empirical approach in a substantively important policy context: the evolution of fiscal policy in developed democracies from the 1950s through the 1990s.

Keywords: Veto Actors, Common Pool Problem, Bargaining, Fiscal Policy

JEL Classification: E62, H00