Electoral Systems and Public Spending

45 Pages Posted: 30 Jan 2006

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: February 2001

Abstract

We study the effects of electoral institutions on the size and composition of public expenditure in OECD and Latin American countries. We present a model emphasizing the distinction between purchases of goods and services, which are easier to target geographically, and transfers, which are easier to target across social groups. Voters have an incentive to elect representatives more prone to transfer spending in proportional systems. The model also predicts higher primary spending in proportional systems when the share of transfer spending is high. After defining rigorous measures of proportionality, we find considerable empirical 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 Systems and Public Spending (February 2001). IMF Working Paper, Vol. , pp. 1-45, 2001. Available at SSRN: https://ssrn.com/abstract=879365

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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Italy

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

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Italy

Centre for Economic Policy Research (CEPR)

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United Kingdom

Massimo Rostagno

European Central Bank (ECB) ( email )

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Postfach 16 03 19
D-60311 Frankfurt am Main
Germany
+49 69 1344 7663 (Phone)
+49 69 1344 7604 (Fax)

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