Working Paper: CEPR ID: DP5233
Authors: Gene Grossman; Elhanan Helpman
Abstract: Polities differ in the extent to which political parties can pre-commit to carry out promised policy actions if they take power. Commitment problems may arise due to a divergence between the ex ante incentives facing national parties that seek to capture control of the legislature and the ex post incentives facing individual legislators, whose interests may be more parochial. We study how differences in "party discipline" shape fiscal policy choices. In particular, we examine the determinants of national spending on local public goods in a three-stage game of campaign rhetoric, voting, and legislative decision-making. We find that the rhetoric and reality of pork-barrel spending, and also the efficiency of the spending regime, bear a non-monotonic relationship to the degree of party discipline.
Keywords: electoral competition; party politics; political economy; public goods
JEL Codes: D72; H41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| party discipline (D72) | spending promises (E62) |
| party discipline (D72) | actual spending levels in majority districts (H59) |
| low party discipline (D72) | extravagant spending promises (E62) |
| high party discipline (D72) | expected welfare of voters (D69) |
| very high levels of party discipline (D72) | spending levels (H59) |