We re-examine the conventional view that to be successful, fiscal adjustments should rely on spending cuts and not on tax increases. We apply the Bai-Perron structural break filter to identify fiscal adjustments and their successfulness in 20 OECD countries. Our results suggest that the composition of fiscal adjustments is not related to their success. Furthermore, we find that political-economy variables considered are not robustly related to successful fiscal adjustments with one exception: the probability of a successful fiscal adjustment increases if left-wing governments rely on spending cuts and right-wing governments rely on tax increases.The views expressed do not necessarily reflect the views of De Nederlandsche Bank. We like to thank participants in the 2016 conference of the European Public Choice Society (March, 2nd -April 2nd, 2016 in Freiburg), in particular our discussant Jao Jalles, and a seminar at the Fiscal Affairs Department at the IMF, and two anonymous referees for their comments on a previous version of the paper.

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This paper examines the impact of labour and product market reforms on economic growth in 25 OECD countries between 1985 and 2013, and tests whether this impact is conditioned by the fiscal policy stance, i.e. whether there are fiscal expansions or adjustments. Our local projection results suggest that controlling for endogeneity of reforms and the stance of fiscal policy is crucial. To control for endogeneity, we use the Augmented Inverse Probability Weighted estimator. Our results suggest that product market reforms mostly cause slight negative growth, except when implemented during periods of neutral fiscal policy. Labour market reforms hurt growth under tight and neutral fiscal policy but are conducive to economic growth if introduced during periods of expansionary fiscal policy.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We test the theory of expressive voting in relation to political ideology in a laboratory experiment. After deriving our hypotheses from a decision theoretic model, we examine voting decisions in an experiment in which we use the size of the electorate as the treatment variable. Terms of use: Documents inUsing a Heckman selection model that includes both the electoral participation decision and voting choice decision, we find mixed results for the expressive voting hypothesis. In line with expressive voting, our findings suggest that non-ideological voters are more likely to abstain from voting than ideological voters -especially when the electorate grows large. Concerning the voting choice decision between an equal but inefficient, and an unequal but efficient income distribution the evidence for expressive voting is mixed. We do find that voters with socialist (left wing) preferences behave expressively, but we do not find this effect for voters with capitalist preferences.JEL-Codes: C910, D720.

R. Wiese). 1 We use the words reforms and privatisations interchangeably. In our framework a privatisations can purely be the result of downsizing public healthcare financing relatively to private financing.2 It is important to stress that the objective of the analysed reforms were to curb health-spending growth relative to income growth, see for example Busse and Reisberg (2004) and Glenngård et al. (2005). Privatisation could also be an objective, we take account of this in our analysis.