Political Leaders' Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries

MAGKS Joint Discussion Paper No. 08-2013

32 Pages Posted: 16 Feb 2013 Last revised: 12 Dec 2014

See all articles by Bernd Hayo

Bernd Hayo

University of Marburg - School of Business & Economics

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Multiple version iconThere are 2 versions of this paper

Date Written: February 13, 2014

Abstract

This paper empirically analyses the relationship between political leaders socioeconomic backgrounds and public budget deficits utilising panel data on 21 OECD countries from 1980 to 2008. Building on sociological, as well as economic, research, we argue that the socioeconomic status of political decision-makers, i.e., presidents or prime ministers, is an important determinant of fiscal budget decisions. Our theory-consistent findings show that the tenures of lower-class leaders i.e., leaders of low socioeconomic status are associated with a deficit-to-GDP ratio which is 1.6 percentage points higher than that during tenures of upper-class leaders.

Keywords: Budget deficit, political leaders, socioeconomic status, time preference

JEL Classification: E62, H11, H62, Z13

Suggested Citation

Hayo, Bernd and Neumeier, Florian, Political Leaders' Socioeconomic Background and Public Budget Deficits: Evidence from OECD Countries (February 13, 2014). MAGKS Joint Discussion Paper No. 08-2013. Available at SSRN: https://ssrn.com/abstract=2217441 or http://dx.doi.org/10.2139/ssrn.2217441

Bernd Hayo (Contact Author)

University of Marburg - School of Business & Economics ( email )

Universitaetsstr. 24
Marburg, D-35032
Germany
++49(0)6421-28-23091 (Phone)
++49(0)6421-28-23193 (Fax)

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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