Institutional arrangements and fiscal performance
Subtitle: the Latin American experience
By: Ernesto Stein, Ernesto Talvi, Alejandro Grisanti.
Contributors: Talvi, Ernesto.; Grisanti, Alejandro.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 6358; Working paper series (National Bureau of Economic Research) -- working paper no. 6358.
Publisher: National Bureau of Economic Research
Published: 1998
Place of publication: Cambridge, MA
Language: eng
Number of pages: 40
Subjects: Proportional representation -- Economic aspects -- Latin America.; Fiscal policy -- Latin America.; Budget deficits -- Latin America.; Budget process -- Political aspects -- Latin America.
Description: 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.
Notes: "January 1998."

Includes bibliographical references (p. 33-36).

Electronic access limited to Binghamton University faculty, staff and students for instructional and research purposes only.

Electronic version available via the Internet at the NBER World Wide Web site.