The political economy of budget deficits

Journal Article

In Leachman et al. (2005) we use the multicointegration approach to test for sustainable fiscal budgeting processes in a stochastic setting in 15 industrialized countries. In this paper, we extend the analysis in order to rank these same countries as well as an additional three, according to the degree to which their budget processes are sustainable. Rankings are related to theories regarding the political economy of budget deficits. Evidence clearly indicates that fiscal performance is better where fiscal budgeting institutions are strong. Additionally, we find that in conjunction with fiscal strength, greater degrees of federalism positively affect intertemporal budget management. © 2007 Blackwell Publishing Ltd.

Full Text

Duke Authors

Cited Authors

  • Leachman, LL; Rosas, G; Lange, P; Bester, A

Published Date

  • 2007

Published In

Volume / Issue

  • 19 / 3

Start / End Page

  • 369 - 420

International Standard Serial Number (ISSN)

  • 0954-1985

Digital Object Identifier (DOI)

  • 10.1111/j.1468-0343.2007.00320.x