Institutional Arrangements and Fiscal Performance: The Latin American Experience

52 Pages Posted: 17 Aug 1998 Last revised: 14 May 2000

See all articles by Ernesto Stein

Ernesto Stein

Inter-American Development Bank (IDB)

Ernesto Talvi

Centro de Estudios de la Realidad Economica y Social (CERES)

Alejandro Grisanti

Inter-American Development Bank (IDB)

Multiple version iconThere are 2 versions of this paper

Date Written: January 1998

Abstract

This paper explores the links between institutional arrangements and fiscal performance in" Latin America. We consider four measures of fiscal performance, namely expenditures, the size of fiscal deficits and debt, and the response of fiscal policy to business" fluctuations; and two institutional dimensions, namely, electoral systems and budgetary processes. " We find evidence that electoral systems characterized by a large degree of proportionality large district magnitude, tend to have larger governments, larger deficits and a more procyclical" response to the business cycle. We also find that more transparent and hierarchical budgetary" procedures lead to lower deficits and debt. Contrary to the findings of Hallerberg and von Hagen" for European countries, we find no evidence that centralized budgetary arrangements neutralize the" potentially adverse impact on fiscal deficits of a larger degree of proportionality of the electoral" system.

Suggested Citation

Stein, Ernesto Hugo and Talvi, Ernesto and Grisanti, Alejandro, Institutional Arrangements and Fiscal Performance: The Latin American Experience (January 1998). NBER Working Paper No. w6358. Available at SSRN: https://ssrn.com/abstract=84088

Ernesto Hugo Stein (Contact Author)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue, NW
Research Department
Washington, DC 20577
United States

Ernesto Talvi

Centro de Estudios de la Realidad Economica y Social (CERES) ( email )

Antonio Costa 3476
11300 Montevideo
Uruguay
(5982)628-7703 / 628 76 44 (Phone)
(5982)622-0526 (Fax)

Alejandro Grisanti

Inter-American Development Bank (IDB)

1300 New York Avenue NW
Washington, DC 20577
United States
Not Available (Phone)
Not Available (Fax)

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