THE BUDGET DILEMMA: EMPIRICAL EVIDENCE FROM CROATIA AND SERBIA

Dušan Pavlović ; Faculty of Political Science, University of Belgrade, Belgrade, Serbia

Fulltext: pdf (407 KB), Serbian, Pages 139 – 158

Abstracts
The author applies a variant of the common pool resources theory to the problem
of public spending under the coalition governments elected by proportional
representation. The claim is that proportional representation produces
cabinets with a large number of parties, and that a large number of parties
brings about higher public spending (measured by budget deficit and public
debt). The author constructs and deploys the concept of budgetary dilemma
to the effect that, absent institutional constraints, public spending results in
expansionary fiscal policy. In the second part, the author empirically tests the
budgetary dilemma in two postcommunist democracies – Serbia and Croatia,
which in 2000-2013 had cabinets with a large number of actors and increasing
public spending. The analysis shows a statistically unreliable predictive
capacity of the main independent variable – the number of parties in the cabinet.
Statistical analysis is followed by several illustrations of the budgetary
dilemma.

Keywords
Proportional Representation; Common Pool Resource Problem; Expansionary Fiscal Policy; Coalition Government; Budgetary Dilemma