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Ideology and redistribution through public spending

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  • Herwartz, Helmut
  • Theilen, Bernd

Abstract

For a panel of OECD economies (1980–2013) we analyse the scope of government ideology to shape patterns of public expenditures. To address if public expenditures are used to channel redistributive outcomes, we adopt a flexible panel error correction model and proceed in two steps: Firstly, we analyse if ideological positions matter for the sizing of the public sector. Secondly, we address the actual impact of government ideology on two disjoint categories of public expenditure that are characterized by distinguished redistributive effects. Under both, left-wing and right-wing governments, public spending shows progressively redistributive effects which are indirectly channelled through their policy response to changing macroeconomic, fiscal and demographic fundamentals. While right-wing governments act progressively redistributive under favourable socio-economic conditions, their left-wing counterparts do so under unfavourable conditions. Comparing the two effects in terms of their explanatory content, we find that the latter is stronger than the former.

Suggested Citation

  • Herwartz, Helmut & Theilen, Bernd, 2017. "Ideology and redistribution through public spending," European Journal of Political Economy, Elsevier, vol. 46(C), pages 74-90.
    • Handle: RePEc:eee:poleco:v:46:y:2017:i:c:p:74-90
    DOI: 10.1016/j.ejpoleco.2016.11.002
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    3. Niklas Potrafke, 2019. "The globalisation–welfare state nexus: Evidence from Asia," The World Economy, Wiley Blackwell, vol. 42(3), pages 959-974, March.
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    5. Georgios Magkonis & Vasileios Logothetis & Kalliopi-Maria Zekente, 2019. "Does the Left Spend More?," Working Papers in Economics & Finance 2019-03, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
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    11. Jianchun Fang & Giray Gozgor & Cheng Yan, 2021. "Does globalisation alleviate polarisation?," The World Economy, Wiley Blackwell, vol. 44(4), pages 1031-1052, April.
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    15. Laméris, Maite D. & Jong-A-Pin, Richard & Garretsen, Harry, 2018. "On the measurement of voter ideology," European Journal of Political Economy, Elsevier, vol. 55(C), pages 417-432.
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    More about this item

    Keywords

    Redistribution; Public expenditure; Government ideology; Electoral cycles; OECD panel data;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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