Markku Harrinvirta &
Mikko Mattila
Department of Political Science
P.O. Box 54
FIN-00014 University of Helsinki
Finland
E-mail: mmattila@valt.helsinki.fi
Abstract
During the past two decades growing public sectors and simultaneous slow economic growth have highlighted the role of deficit management as a central part of economic policies in modern democracies. Both economists and political scientists have emphasised the role of political institutions in public financial policies. This study contributes to this growing body of research by showing that: 1) during election years public deficits increase because governments refrain from raising taxes; 2) multi-party governments do not suffer from deficit problems more than one-party governments but they are more likely to raise both public expenditure and revenue; 3) in deficit reduction one-party governments with decentralised labour markets emphasise expenditure cuts while multi-party governments with centralised labour markets raise taxes; 4) as a consequence highest tax rates can be found in countries with centralised labour markets, especially if labour market centralisation is combined with multi-party government.
Here is the data we used in the analysis in spss or in wk1 format (which you can read directly into Limdep or other statistical packages).
Finally, here are some explanations about the variables in the datasets.