The Political Economy of Deficit Spending in Nine Industrialized Parliamentary Democracies

Abstract

This article analyzes the influence of four sets of factors on deficit spending in 9 industrialized parliamentary democracies during 1958-1990. This article analyzes the influence of these factors and introduces and tests the importance of an additional potential influence on the size of a country's fiscal deficit: the “strength of fiscal bureaucracy.” It is argued that the stronger a country's fiscal bureaucracy, the lower its deficit, ceteris paribus. Empirically, the authors find that the state of a nation's economy heavily affects its deficit. Little systematic relationship is found between the ideology of the ruling political party and a nation's deficit or between the political strength of the ruling party and deficits, in contrast to the findings of Roubini and Sachs. Finally, it is found that the strength of a country's fiscal bureaucracy is an important influence on the deficit in these 9 industrialized parliamentary democracies.