Revisiting the political economy of fiscal adjustments
基于1970-2016年欧盟、欧元区和OECD-19面板数据，用logit和probit模型分析财政紧缩或宽松政策对政府生存概率的影响，发现财政平衡无法预测总理更替，而通胀和失业率显著相关。
The political economy of fiscal adjustments is revisited within the framework of Alesina et al. (1998). A panel that spans from 1970 to 2016 for three datasets (European Union, Eurozone and OECD-19) is constructed. Both descriptive statistics and regression analysis is employed. We assess how successful are policies for budget consolidation. Panel logit and heteroskedasticity probit evaluate the probability of government’s survival after having engaged in tight (loose) fiscal policies. Economic variables and political characteristics of the cabinets are taken into account in the specifications. We reveal that the fiscal balance is an insignificant predictor for the changes of the prime minister or the ideology of the cabinet. Inflation and unemployment rate are significant and positively related to changes in government while spending adjustment composition dummies are negative and significant predictors for such changes. Revenue based adjustments have no effect on re-election prospects. Our results are robust to sensitivity checks, including various sub-sample analysis and non-linear specifications.