The Decline in Public Investment: 'Social Dominance' or Too-Rigid Fiscal Rules?

Delgado-Téllez, Mar; Mora, Esther Gordo; Kataryniuk, Iván; Pérez, Javier J.

doi:10.2139/ssrn.3666800

Cited by 9 publications

(3 citation statements)

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“…Using data for 22 Organisation for Economic Co-operation and Development countries, Dahan and Strawczynski (2013) show that FR mostly reduce the growth of total public expenditure, a result confirmed by Barbier-Gauchard et al (2021). For disaggregated spending, consistent with Peree and Valila (2005) and Valila and Mehrotra (2005), Delgado-Tellez et al (2020) find that FR do not significantly affect public investment in the developed world, in line with Dahan and Strawczynski (2013) for the ratio between various components of public spending (with the notable exception of expenditure rules). Taking stock of these studies, the goal of our paper is to investigate how do FR shape governments' spending behavior.…”

supporting

confidence: 78%

“…For disaggregated spending, consistent with Peree and Valila (2005) and Valila and Mehrotra (2005), Delgado‐Tellez et al. (2020) find that FR do not significantly affect public investment in the developed world, in line with Dahan and Strawczynski (2013) for the ratio between various components of public spending (with the notable exception of expenditure rules). Taking stock of these studies, the goal of our paper is to investigate how do FR shape governments' spending behavior.…”

Section: Introductionsupporting

confidence: 63%

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How do fiscal rules shape governments' spending behavior?

Vinturis

2022

Economic Inquiry

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At odds with the large literature devoted to the fiscal discipline effects of fiscal rules, only few contributions investigate their impact on public spending.Estimations based on the entropy balancing method reveal the following causal effects: fiscal rules significantly reduce total public spending and public consumption, leave public investment mostly unaffected, and increase the public investment-to-public consumption ratio. Moreover, the type of fiscal rule and countries' level of economic development influence the way fiscal rules affect public spending. Lastly, fiscal rules' features are a major driving force of the way governments change public spending in the presence of fiscal rules.

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supporting

confidence: 78%

Section: Introductionsupporting

confidence: 63%

How do fiscal rules shape governments' spending behavior?

Vinturis

2022

Economic Inquiry

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“…Another example on how the federal reelection probability function might affect the decisions on grants is related to the stylized fact called as social dominance. This hypothesis asserts that the structural decline in public investment expenses comes from upward social trends rooted in ageing population and social preferences notably biased in favor of present consumption (Delgado‐Téllez et al, 2020; Jäger & Schmidt, 2016). In this context, the federal government will probably see an electoral impact of present versus future utilities markedly guided toward period 1, that is,

\frac{\frac{\partial p_{i}}{\partial u_{i}}}{\frac{\partial p_{i}}{\partial v_{i}}} > 1 .

Otherwise if the population is relatively young.…”

Section: Discussion Of the Resultsmentioning

confidence: 99%

Subnational borrowing and bailouts: When the federal government looks at the votes (differently) and its borrowing matters

Martínez‐López

2021

J Public Economic Theory

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Sometimes it is difficult to find a rationale for episodes of bailouts in which the political motivations of the federal government are not clear cut. In other cases, the soft‐budget constraint of subnational governments (SNGs) seems to be based on unlimited federal resources. This paper aims to shed some light on both issues taking as a reference the workhorse model developed by Goodspeed. The principal change in its basic assumptions lies in allowing the federal government to borrow to finance its grants to SNGs. The results indicate that the way in which the federal government translates voters' preferences into electoral probabilities is crucial to determine grants. Moreover, the SNGs do not borrow excessively. When the model is extended to consider risk premium spreads in the SNGs debt and the option of transferring part of their borrowing to the upper level, the main outcomes remain.

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Wage Determination and the Bite of Collective Contracts in Italy and Spain: Evidence from the Metal Working Industry

Adamopoulou

Villanueva

2020

SSRN Journal

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The Working Paper Series seeks to disseminate original research in economics and finance. All papers have been anonymously refereed. By publishing these papers, the Banco de España aims to contribute to economic analysis and, in particular, to knowledge of the Spanish economy and its international environment.The opinions and analyses in the Working Paper Series are the responsibility of the authors and, therefore, do not necessarily coincide with those of the Banco de España or the Eurosystem.The Banco de España disseminates its main reports and most of its publications via the Internet at the following website: http://www.bde.es.Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged.

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The Decline in Public Investment: 'Social Dominance' or Too-Rigid Fiscal Rules?

Cited by 9 publications

References 0 publications

How do fiscal rules shape governments' spending behavior?

How do fiscal rules shape governments' spending behavior?

Subnational borrowing and bailouts: When the federal government looks at the votes (differently) and its borrowing matters

Wage Determination and the Bite of Collective Contracts in Italy and Spain: Evidence from the Metal Working Industry

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