Cabinet Durability and Fiscal Discipline All of this is to say that,while the supply of governments want to be reelected and voters factor research devoted to understanding the causes of economic performance into their choices at the ballot government durability is vast and deep,the supply of box.As such,opportunistic governments may stimulate empirical research devoted to understanding the con- the economy (or at least their supporters'economic sequences of government durability is nearly nonexis- prospects)in the short term by increasing spending in tent.As such,whether or not cabinet stability actually hopes that voters will be persuaded of their managerial bears any real policy consequences remains an almost competence.5 Thus,we should observe greater spend- entirely open question,one that we begin to provide an ing in election years or pre-election years. answer to by assessing the relationship between gov- Despite the intuitiveness and simplicity of the theo- ernment longevity and public spending-perhaps the retical account of electoral budget cycles,the literature most significant policy decision that governments must on the subject has been characterized by intense de- make. bate."The endurance of the debate derives from a stark contrast between the commonsense nature of the op- PUBLIC SPENDING portunistic argument and the paucity of evidence sup- porting its key implication"(Clark et al.1998,87-88). Interest in public spending in political economic re Evidence is particularly weak in the case of consol- search is pervasive.Though there are a variety of idated democracies with advanced economies (Bren- themes within the literature,our interest here is in re- der and Drazen 2005).Many scholars argue that one search devoted to the study of public spending as a re- reason for this is the lack of consideration given to alization of the common pool resource problem,partic the structure of political and economic institutions- ularly the research on the presence of PBCs.In short, several of which may provide constraints on the ability government parties are accountable to a subset of the of governments to stimulate spending in the run-up to electorate that has particular spending priorities.Gov- election.For example.Persson and Tabellini(2005)find ernments may engage in directed spending to please that welfare spending tends to increase in the vicinity 4 their supporters,who enjoy the benefits of that spend- of elections to a larger degree in proportional systems ing while bearing only a fraction of its costs.This im- than in single-member systems,because proportional balance between the concentrated benefits accruing to rules broaden the population parties must appeal to government supporters and the costs of expenditures, for support.Rose(2006)provides evidence that formal which are diffused more evenly across the electorate, balanced budget rules constrain PBCs in the American means that demand for spending within the govern- states and Alt and Lassen (2006)argue that fiscal pol- ment's supporting coalition tends to be greater than icy transparency may similarly constrain governments it would be otherwise and the commons (national cof- by exposing their manipulation to voters.Analyzing 19 fers)are at risk of depletion. advanced democracies,they find evidence that cycles Bawn and Rosenbluth (2006)argue that this prob- exist,but only in opaque fiscal environments. lem is exacerbated by increasing the diversity of the This institutional approach to the search for PBCs groups represented by the cabinet,as is the case in sheds light on the discord between the theoretical re- coalition governance,so long as the benefits of spend- search.which had reached a near unanimous consen- ing enjoyed by those groups continue to outpace the sus in the expectation of PBCs,and the empirical re- costs they bear.A similar argument is presented by search that had found inconsistent evidence for them Persson,Roland,and Tabellini(2007).Though subse- in advanced democracies.Cabinets do not operate in quent research by Martin and Vanberg(2013)suggests isolation of their institutional constraints,thus,neither that the temptation to grow public spending as a result should our empirical investigations of their choices. of increasing the number of parties in government may Nonetheless,according to Philips's(2016)meta anal- be mitigated by institutions constraining the budgeting ysis of PBC scholarship,93%of studies ignore institu- process,the robust empirical connection between elec tional variation in the timing of elections by assuming toral incentives and public spending persists.In the ab- that it is fixed and known ex ante,while the remain- sence of strict institutional barriers,governments will ing 7%assume electoral timing is endogenous-that it spend excessively to please their supporters. is chosen by the incumbent.?This is surprising in light The notion that governments have strong electoral of the recent advances in modeling institutional diver- incentives to spend on their supporters is a special case sity in the PBC literature and even more surprising of the intuitive theoretical argument motivating the given the robust literature on the nature of government 四 search for PBCs.The classic argument is as follows: durability and the common sense realization that both of these assumptions are unrealistic for parliamentary democracies. growth,increase government consumption,or increase redistribution (e.g.,Alesina and Perotti 1996:Annett 2001:Carmignani 2009.re. spectively).However,these works are overwhelmingly focused on political violence or revolution when referring to "political instabil- Our primary concern in this manuscript is on public spending,how ity."As such,none consider primarily modern economies and peace. ever,the extant research on political budget cycles has considered ful transitions of power within consolidated democracies,which is not only spending,but also monetary policy,typically focused on our focus here.We also note that Perry and Robertson(1998)include the inflation-unemployment tradeoff,as in the canonical works of a type of government durability measure in an index of executive Nordhaus (1975)and MacRae (1977). consistency that is regressed on a measure of a state's bond risk in a These figures are not reported in the original article but tallied from sample of advanced,stable democracies. the replication materials. 941Cabinet Durability and Fiscal Discipline All of this is to say that, while the supply of research devoted to understanding the causes of government durability is vast and deep, the supply of empirical research devoted to understanding the con￾sequences of government durability is nearly nonexis￾tent. As such, whether or not cabinet stability actually bears any real policy consequences remains an almost entirely open question, one that we begin to provide an answer to by assessing the relationship between gov￾ernment longevity and public spending—perhaps the most significant policy decision that governments must make. PUBLIC SPENDING Interest in public spending in political economic re￾search is pervasive. Though there are a variety of themes within the literature, our interest here is in re￾search devoted to the study of public spending as a re￾alization of the common pool resource problem, partic￾ularly the research on the presence of PBCs. In short, government parties are accountable to a subset of the electorate that has particular spending priorities. Gov￾ernments may engage in directed spending to please their supporters, who enjoy the benefits of that spend￾ing while bearing only a fraction of its costs. This im￾balance between the concentrated benefits accruing to government supporters and the costs of expenditures, which are diffused more evenly across the electorate, means that demand for spending within the govern￾ment’s supporting coalition tends to be greater than it would be otherwise and the commons (national cof￾fers) are at risk of depletion. Bawn and Rosenbluth (2006) argue that this prob￾lem is exacerbated by increasing the diversity of the groups represented by the cabinet, as is the case in coalition governance, so long as the benefits of spend￾ing enjoyed by those groups continue to outpace the costs they bear. A similar argument is presented by Persson, Roland, and Tabellini (2007). Though subse￾quent research by Martin and Vanberg (2013) suggests that the temptation to grow public spending as a result of increasing the number of parties in government may be mitigated by institutions constraining the budgeting process, the robust empirical connection between elec￾toral incentives and public spending persists. In the ab￾sence of strict institutional barriers, governments will spend excessively to please their supporters. The notion that governments have strong electoral incentives to spend on their supporters is a special case of the intuitive theoretical argument motivating the search for PBCs. The classic argument is as follows: growth,increase government consumption, or increase redistribution (e.g., Alesina and Perotti 1996; Annett 2001; Carmignani 2009, re￾spectively). However, these works are overwhelmingly focused on political violence or revolution when referring to “political instabil￾ity.” As such, none consider primarily modern economies and peace￾ful transitions of power within consolidated democracies, which is our focus here.We also note that Perry and Robertson (1998) include a type of government durability measure in an index of executive consistency that is regressed on a measure of a state’s bond risk in a sample of advanced, stable democracies. governments want to be reelected and voters factor economic performance into their choices at the ballot box.As such, opportunistic governments may stimulate the economy (or at least their supporters’ economic prospects) in the short term by increasing spending in hopes that voters will be persuaded of their managerial competence.6 Thus, we should observe greater spend￾ing in election years or pre-election years. Despite the intuitiveness and simplicity of the theo￾retical account of electoral budget cycles, the literature on the subject has been characterized by intense de￾bate. “The endurance of the debate derives from a stark contrast between the commonsense nature of the op￾portunistic argument and the paucity of evidence sup￾porting its key implication” (Clark et al. 1998, 87–88). Evidence is particularly weak in the case of consol￾idated democracies with advanced economies (Bren￾der and Drazen 2005). Many scholars argue that one reason for this is the lack of consideration given to the structure of political and economic institutions— several of which may provide constraints on the ability of governments to stimulate spending in the run-up to election.For example,Persson and Tabellini (2005) find that welfare spending tends to increase in the vicinity of elections to a larger degree in proportional systems than in single-member systems, because proportional rules broaden the population parties must appeal to for support. Rose (2006) provides evidence that formal balanced budget rules constrain PBCs in the American states and Alt and Lassen (2006) argue that fiscal pol￾icy transparency may similarly constrain governments by exposing their manipulation to voters. Analyzing 19 advanced democracies, they find evidence that cycles exist, but only in opaque fiscal environments. This institutional approach to the search for PBCs sheds light on the discord between the theoretical re￾search, which had reached a near unanimous consen￾sus in the expectation of PBCs, and the empirical re￾search that had found inconsistent evidence for them in advanced democracies. Cabinets do not operate in isolation of their institutional constraints, thus, neither should our empirical investigations of their choices. Nonetheless, according to Philips’s (2016) meta anal￾ysis of PBC scholarship, 93% of studies ignore institu￾tional variation in the timing of elections by assuming that it is fixed and known ex ante, while the remain￾ing 7% assume electoral timing is endogenous—that it is chosen by the incumbent.7 This is surprising in light of the recent advances in modeling institutional diver￾sity in the PBC literature and even more surprising given the robust literature on the nature of government durability and the common sense realization that both of these assumptions are unrealistic for parliamentary democracies. 6 Our primary concern in this manuscript is on public spending, how￾ever, the extant research on political budget cycles has considered not only spending, but also monetary policy, typically focused on the inflation-unemployment tradeoff, as in the canonical works of Nordhaus (1975) and MacRae (1977). 7 These figures are not reported in the original article but tallied from the replication materials. 941 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000436