Public Spending: The Effect of Political Fragmentation
Articles
Aras Zirgulis
ISM University of Management and Economics
Mantas Eitutis
ISM University of Management and Economics
Published 2016-12-05
https://doi.org/10.21277/sc.v1i39.75
PDF

Keywords

government expenditure
political fragmentation
political economy
monetary policy

How to Cite

Zirgulis A. and Eitutis M. (2016) “Public Spending: The Effect of Political Fragmentation”, Socialiniai tyrimai, 39(1), pp. 37-48. doi: 10.21277/sc.v1i39.75.

Abstract

This paper analyses the effects of political fragmentation of central government expenditure. We have defined political fragmentation as the number of spending ministers in the government and the number of political parties in the governing coalition. Previous studies have found evidence of a positive relationship between the two sides. We have tested this relationship using more recent data (from 1999-2011) on a panel of 29 countries. Furthermore, due to an intense debate about the effects of monetary policy on fiscal discipline, we also investigate a rather unorthodox idea that the absence of independent monetary policy in a country diminishes the effects of political fragmentation. We have found that the coalition size interacting with economic growth has an effect on public spending but that the traditional measures of political fragmentation, in themselves, do not have any effect - in contradiction with past findings. We have also failed to find a relationship between independent monetary policy on fiscal discipline.

PDF
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.