I contribute to the literature on the growth of public spending in Western economies with a novel mechanism that ties it to the marketization process, i.e. the substitution of home with market production. I argue that a key contributor to the expansion of social spending is the replacement of family-based transfers with public pensions and other public transfer programs. I provide empirical support for this hypothesis by establishing the long-run relationship between government size and marketization, alongside other established determinants of government spending, in a panel of Western economies. I then illustrate a potential mechanism behind the results with a theoretical model in which, as a result of the productivity advantage of the market over the home sector, family-based intergenerational transfers decline unexpectedly, providing a rationale for government intervention in the form of public pensions with a poverty relief component.

In path-breaking work, Weingast et al. argue that there is a positive relationship between legislature size and inefficiency in public expenditures. Their proposition is currently known as the ‘law of 1/n’ and has been widely debated in political science and public administration. However, recent studies have questioned the validity of the theory. In this letter, we conduct the first meta-analysis that assesses the generality of the ‘law of 1/n’. Based on a sample of thirty articles, we find no robust evidence suggesting that legislature size has either a positive or a negative effect on government budgets. Yet, the aggregate results mask considerable heterogeneity. Our findings provide moderate support for the ‘law of 1/n’ in unicameral legislatures and in upper houses, but they also indicate that studies using panel/fixed-effects models or regression-discontinuity designs report negative public spending estimates. We find only limited evidence that electoral systems impact public spending, which suggests that proportional representation systems may not be more prone to overspending than majoritarian ones.

This article studies how public investment and other types of spending by municipal governments shape perceptions of corruption in Mexico. We argue, drawing on various strands of literature, that investment in visible public works projects should lower corruption perceptions, given the well-known difficulties in directly observing corrupt acts. Contrary to our expectations and common assumptions in studies of public investment, we find that more public investment by municipal governments is associated, on average, with higher corruption perceptions. However, this effect is mediated by individuals’ education levels. For individuals with less formal education, higher public investment correlates with higher perceived corruption, while highly educated individuals perceive less corruption when municipal public investment is high. The study uses qualitative evidence from municipal audit reports to identify a possible mechanism driving this outcome: municipal investments may not be targeted to the poorer neighborhoods with greater public service deficits.

This article contributes to the literature on direct democracy and public spending in two ways. First, we explore how direct democratic institutions interact with a specific aspect of the representative system, the size of the governing coalition, to influence public spending. Second, based on newly collected data, we examine the relationship between three different direct democratic institutions, coalition size and public spending over the period from 1860 to 2015. Empirically, we find that initiatives increase the size of the public sector under single-party governments, but this positive relationship disappears as coalition size increases. In contrast, we find that financial referendums slow down the growth of public spending, while law referendums are not systematically associated with public spending. Finally, we find that the relationship between direct democratic institutions, coalition size and public spending does not change over time despite the long period under investigation.

Latin America is one of the world's only regions to have witnessed a fall in income inequality during the 2000s. This paper evaluates the role fiscal policy played in this change. Recent scholarship has examined this in individual countries; lacking is a regional perspective. We examine the effects of nine fiscal instruments on income inequality in 17 countries between 1990 and 2014. Fiscal policy had a positive – albeit small – effect in reducing income inequality, especially from 2003, working best at the urban level. Public spending on education, personal income taxes and social contributions were especially instrumental in reducing income inequality.

We investigate the relationship between economic development and the growth of the state by testing Wagner's Law. We begin with a general test, and find it does not hold in all cases: it breaks down at higher levels of development and in more recent time periods. This suggests that Wagner's law has specific scope conditions, beyond which states do not continue to grow as economies grow. We use a series of models to explore the temporal scope of Wagner's law and the point at which state growth may hit a ceiling. We conclude limits on the growth of the state are set by limits on the capacity of states to increase taxation. States can avoid this problem temporarily by running budget deficits, but eventually accumulated debt forces them to cut expenditures. Spending is tied to tax revenue like a rubber band, it can stretch only so far before being pulled back.

Public spending arguably increases with the number of parties in government as each party seeks to secure benefits to its target groups. In this study, two factors that affect the budgetary consequences of multiparty government are identified. The first is the distribution of a priori voting power. An uneven distribution of voting power implies that all government parties are not expected to be equally successful in budgetary negotiations. The second is the degree of impartiality of the public sector. If the public sector is characterized by corruption and other forms of partiality, distributive issues can be expected to gain importance in representative politics. An analysis of data from 30 European countries suggests that changes in the number of government parties are associated with changes in public spending in cases where equally powerful parties are in government and the public sector is relatively partial.

Issue ownership theory posits that when social welfare is electorally salient, left-wing parties gain public support by rhetorically emphasizing social welfare issues. There is less research, however, on whether left-wing governing parties benefit from increasing social welfare spending. That is, it is not known whether leftist governments gain from acting on the issues they rhetorically emphasize. This article presents arguments that voters will not react to governments’ social welfare rhetoric, and reviews the conflicting arguments about how government support responds to social welfare spending. It then reports time-series, cross-sectional analyses of data on government support, governments’ social welfare rhetoric and social welfare spending from Britain, Spain and the United States, that support the prediction that government rhetoric has no effects. The article estimates, however, that increased social welfare spending sharply depresses support for both left- and right-wing governments. These findings highlight a strategic dilemma for left-wing governments, which lose public support when they act on their social welfare rhetoric by increasing welfare spending.

Theories of public policy change, despite their differences, converge on one point of strong agreement: the relationship between policy and its causes can and does change over time. This consensus yields numerous empirical implications, but our standard analytical tools are inadequate for testing them. As a result, the dynamic and transformative relationships predicted by policy theories have been left largely unexplored in time series analysis of public policy. This article introduces dynamic linear modelling (DLM) as a useful statistical tool for exploring time-varying relationships in public policy. The article offers a detailed exposition of the DLM approach and illustrates its usefulness with a time series analysis of United States defense policy from 1957 to 2010. The results point the way for a new attention to dynamics in the policy process, and the article concludes with a discussion of how this research programme can profit from applying DLMs.

This article investigates public and private goods provision in two hybrid regimes: Hong Kong and Singapore. We build on the selectorate theory, which analyses all regimes in terms of the size of their leaders’ support coalitions. This research follows a differences-in-differences design, with the exogenous political change in Hong Kong in 1997 as a treatment and Singapore as a control case. This study contributes to the literature in two ways. First, as the aim of the selectorate theory is to transcend traditional regime typologies, a focus on hybrid regimes provides another test of the theory beyond the democratic–authoritarian divide. Second, the distinctive comparative set-up allows us to disentangle the effects of the size of the winning coalition from those of supporter loyalty. The empirical results demonstrate that whilst public goods increase with the winning coalition size, private goods provision is not affected unless accompanied by a change in supporter loyalty.

We introduce public spending, financed through income taxation, into the Ramsey model with heterogeneous agents. Public spending as a source of welfare generates more complex dynamics. In contrast to previous contributions focusing on similar models but with wasteful public spending, limit cycles through Hopf bifurcation and expectation-driven fluctuations appear if the degree of capital–labor substitution is high enough to be compatible with capital income monotonicity. Moreover, unlike frameworks with a representative agent, our results do not require externalities in production and are compatible with a weakly elastic labor supply with respect to wage.

This paper studies the expansion of mass education in Latin America in the twentieth century from a global comparative perspective. The paper argues that expansion in terms of enrolment and attainment levels was quite impressive. A comparative analysis of the grade enrolment distribution demonstrates, however, that the rapid expansion of primary school enrolment did not correspond with an equally impressive improvement in educational quality. The persistently large tertiary education bias in public education spending suggests that part of the poor quality performance is related to a lack of fscal support for primary education and that the political economy explanation for educational underdevelopment, as advanced by Engerman, Mariscal and Sokoloff for the 19th century, still applied to Latin America during most of the 20th century.

Dans cet article, nous considérons la mise en œuvre du critère de l'offre économiquement la plus avantageuse dans des marchés publics passés par voie électronique. Pour cela, nous analysons la procédure usuelle de l'enchère anglaise inversée avec bonus de qualité en considérant que les coûts de production des offreurs sont croissants avec le niveau de qualité des produits et que la fonction d'utilité des acheteurs est concave en qualité. Nous montrons que cette procédure ne concrétise pas en général le mécanisme d'enchères optimal. Nous montrons ensuite qu'un plafonnement des prix dans l'enchère anglaise permet de restaurer l'optimalité de la procédure et de mettre en œuvre une discrimination analogue à la discrimination optimale dans le cas uniforme.