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Partisan Fiscal Policy: Evidence from Central and Eastern Europe

Author

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  • Ondrej Schneider

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 21, 110 00, Prague, Czech Republic)

Abstract

This paper examines effects of political ideology of a governing party on fiscal outcomes, using data from eight Central and Eastern European countries in the 2001-2017 period. The analysis shows that there is a statistically significant effect of conservative governments on fiscal variables, namely they tend to reduce expenditures and improve fiscal balance by 0.4-0.7% of GDP. Conservative governments are found to reduce expenditures on social security and health care, but they tend to increase subsidies. This may be explained by their proximity to business interests that typically benefit from these subsidies. Our result suggest that while conservative governments do tend to reduce public spending and run smaller deficits, their impact on fiscal outcomes is more limited than they often claim.

Suggested Citation

  • Ondrej Schneider, 2019. "Partisan Fiscal Policy: Evidence from Central and Eastern Europe," Working Papers IES 2019/37, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2019.
    • Handle: RePEc:fau:wpaper:wp2019_37
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    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6191
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    More about this item

    Keywords

    fiscal policy; political parties; budget deficit; Europe;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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