Electoral Rules and Public Spending

55 Pages Posted: 17 Apr 2001

See all articles by Gian Maria Milesi-Ferretti

Gian Maria Milesi-Ferretti

International Monetary Fund (IMF); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Roberto Perotti

Bocconi University - Department of Economics; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Massimo Rostagno

European Central Bank (ECB)

Date Written: March 2001

Abstract

We study the effects of electoral institutions on the size and composition of public expenditure in OECD and Latin American countries. We emphasize the distinction between purchases of goods and services, which are easier to target geographically, and transfers, which are easier to target across social groups. We present a theoretical model in which voters anticipating government policymaking under different electoral systems have an incentive to elect representatives more prone to transfer (public good) spending in proportional (majoritarian) systems. The model also predicts higher total primary spending in proportional (majoritarian) systems when the share of transfer spending is high (low). After defining rigorous measures of proportionality to be used in the empirical investigation, we find considerable support for our predictions.

Keywords: Electoral rules, proportionality, public spending, transfers

JEL Classification: H11, H55

Suggested Citation

Milesi-Ferretti, Gian Maria and Perotti, Roberto and Rostagno, Massimo, Electoral Rules and Public Spending (March 2001). CEPR Discussion Paper No. 2742. Available at SSRN: https://ssrn.com/abstract=267100

Gian Maria Milesi-Ferretti (Contact Author)

International Monetary Fund (IMF) ( email )

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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Roberto Perotti

Bocconi University - Department of Economics ( email )

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European University Institute - Economics Department (ECO) ( email )

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Centre for Economic Policy Research (CEPR)

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United Kingdom

Massimo Rostagno

European Central Bank (ECB) ( email )

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Germany
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+49 69 1344 7604 (Fax)

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