IDEAS home Printed from https://ideas.repec.org/a/kap/itaxpf/v9y2002i4p379-389.html
   My bibliography  Save this article

Does Centralization Increase the Size of Government? The Effects of Separation of Powers and Lobbying

Author

Listed:
  • Isidoro Mazza
  • Frans Winden

Abstract

Difficulties faced by the Economic and Monetary Union have strengthened the position of those who advocate a process of (further) political integration in the European Union (EU). A widespread fear is, though, that such a process would favor powerful interest groups able to lobby the EU policymakers. Persson and Tabellini (1994) argue that political centralization will increase the size of the government through lobbying because of free-riding incentives created by federally funded programs with localized benefits. We extend their analysis by presenting a model where the budgeting process is divided into two stages, instead of one, which better captures the EU institutional framework. A federal legislator (the Council) chooses the size of the budget at one stage, while a federal agency (the Commission) chooses the allocation of the budget at the next stage. We show that separation of powers in the budgeting process restricts free riding and, therefore, reduces the incentives to lobby. The result is an unchanged budget under centralization. Moreover, it is shown that if the lobbying activity is directed to both policymakers, competitive lobbying may actually reduce the size of the public sector under centralized policymaking. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Isidoro Mazza & Frans Winden, 2002. "Does Centralization Increase the Size of Government? The Effects of Separation of Powers and Lobbying," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 379-389, August.
  • Handle: RePEc:kap:itaxpf:v:9:y:2002:i:4:p:379-389
    DOI: 10.1023/A:1016559801671
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1023/A:1016559801671
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1023/A:1016559801671?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kletzer, Kenneth & von Hagen, Jurgen, 2000. "Monetary Union and Fiscal Federalism," CEPR Discussion Papers 2615, C.E.P.R. Discussion Papers.
    2. Torsten Persson & Gérard Roland & Guido Tabellini, 1997. "Separation of Powers and Political Accountability," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1163-1202.
    3. Maurice Obstfeld & Giovanni Peri, 1998. "Regional non-adjustment and fiscal policy," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 13(26), pages 206-259.
    4. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    5. Persson, Torsten & Tabellini, Guido, 1994. "Does centralization increase the size of government?," European Economic Review, Elsevier, vol. 38(3-4), pages 765-773, April.
    6. Chari, V V & Jones, Larry E & Marimon, Ramon, 1997. "The Economics of Split-Ticket Voting in Representative Democracies," American Economic Review, American Economic Association, vol. 87(5), pages 957-976, December.
    7. Grossman, Herschel I. & Noh, Suk Jae, 1994. "Proprietary public finance and economic welfare," Journal of Public Economics, Elsevier, vol. 53(2), pages 187-204, February.
    8. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-664, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giardina, Emilio & Cavalieri, Marina & Guccio, Calogero & Mazza, Isidoro, 2009. "Federalism, Party Competition and Budget Outcome: Empirical Findings on Regional Health Expenditure in Italy," MPRA Paper 16437, University Library of Munich, Germany.
    2. Ryo Ishida, 2012. "The Effect of Tax Credit on Politically Distorted Allocations: A Theoretical Approach," Discussion papers ron234, Policy Research Institute, Ministry of Finance Japan, revised Jun 2012.
    3. Robert Dur & Hein Roelfsema, 2005. "Why does centralisation fail to internalise policy externalities?," Public Choice, Springer, vol. 122(3), pages 395-416, March.
    4. Martin Gregor, 2008. "Rozpočtová pravidla a rozpočtový proces: Teorie, empirie a realita České republiky [Budgetary rules and budget process: Theory, empirics, and the case of the Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(4), pages 484-504.
    5. Di Vita Giuseppe, 2015. "Centralization versus Decentralization of Legislative Production and the Effect on Litigation: A Case Study," Review of Law & Economics, De Gruyter, vol. 11(2), pages 267-291, July.
    6. H.J. Roelfsema, 2004. "Legislative Bargaining and Lobbying in the European Union," Working Papers 04-16, Utrecht School of Economics.
    7. Mazza, Isidoro & van Winden, Frans, 2008. "An endogenous policy model of hierarchical government," European Economic Review, Elsevier, vol. 52(1), pages 133-149, January.
    8. Reuben E., 2002. "Interest groups and politics: The need to concentrate on group formation," Public Economics 0212001, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    2. Mattozzi, Andrea & Snowberg, Erik, 2018. "The right type of legislator: A theory of taxation and representation," Journal of Public Economics, Elsevier, vol. 159(C), pages 54-65.
    3. Mazza, Isidoro & van Winden, Frans, 2008. "An endogenous policy model of hierarchical government," European Economic Review, Elsevier, vol. 52(1), pages 133-149, January.
    4. Robinson, James A. & Torvik, Ragnar, 2009. "A political economy theory of the soft budget constraint," European Economic Review, Elsevier, vol. 53(7), pages 786-798, October.
    5. Ernesto H. Stein, 1998. "Descentralización fiscal y tamaño de los gobiernos en América Latina," Research Department Publications 4113, Inter-American Development Bank, Research Department.
    6. Dharmapala, Dhammika, 2006. "The Congressional budget process, aggregate spending, and statutory budget rules," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 119-141, January.
    7. Robert P. Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall.
    8. Ernesto Stein, 1999. "Fiscal Decentralization and Government Size in Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 357-391, November.
    9. Dhammika Dharmapala, 2002. "The Congressional Budget Process and the Aggregate Level of Spending," Working papers 2002-13, University of Connecticut, Department of Economics.
    10. Laurent Bouton & Paola Conconi & Francisco Pino & Maurizio Zanardi, 2018. "Guns, Environment, and Abortion: How Single-Minded Voters Shape Politicians' Decisions," Working Papers gueconwpa~18-18-15, Georgetown University, Department of Economics.
    11. Daniel Diermeier & Pohan Fong, 2011. "Bargaining over the budget," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 36(3), pages 565-589, April.
    12. Gianmarco Daniele & Amedeo Piolatto & Willem Sas, 2018. "Who Sent You? Strategic Voting, Transfers and Bailouts in a Federation," Working Papers. Serie AD 2018-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    13. Russo, Massimo, 1998. "Policy coordination in the European Union (from the EMS to EMU)," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34386, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    14. Feld, Lars P. & Fritz, Benedikt, 2015. "The political economy of municipal amalgamation: Evidence of common pool effects and local public debt," Freiburg Discussion Papers on Constitutional Economics 15/10, Walter Eucken Institut e.V..
    15. Martimort, David, 1996. "The multiprincipal nature of government," European Economic Review, Elsevier, vol. 40(3-5), pages 673-685, April.
    16. Bueno de Mesquita, Ethan & Landa, Dimitri, 2015. "Political accountability and sequential policymaking," Journal of Public Economics, Elsevier, vol. 132(C), pages 95-108.
    17. Antonio Merlo, 2005. "Whither Political Economy? Theories, Facts and Issues," PIER Working Paper Archive 05-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005.
    18. Joao Tovar Jalles & Carlos Mulas‐Granados & José Tavares, 2021. "Fiscal discipline and exchange rates: Does politics matter?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(2), pages 155-178, May.
    19. Acemoglu, Daron & Golosov, Mikhail & Tsyvinski, Aleh, 2011. "Power fluctuations and political economy," Journal of Economic Theory, Elsevier, vol. 146(3), pages 1009-1041, May.
    20. Massimo Bordignon & Matteo Gamalerio & Gilberto Turati, 2013. "Decentralization, Vertical Fiscal Imbalance, and Political Selection," DISCE - Working Papers del Dipartimento di Economia e Finanza def002, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:itaxpf:v:9:y:2002:i:4:p:379-389. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.