Legislative influences in Japanese budgetary politics

Abstract

Following World War II (W.W.II), Japan adopted a democratic parliamentary system. Since its formation in 1955 the Liberal Democratic Party (LDP) had monopolized Japanese legislature (Diet) for over 35 years. However, it is said that at the center of the budgetary process was the Ministry of Finance (MOF). Elite bureaucrats rather than politicians are typically seen as the agenda-setter. The action of politicians, in particular members of the LDP, to influence the budgetary resource allocation has been largely unexamined. This paper empirically examines the influence of the LDP on the supplementary budget formation and on the revenue-sharing. We find that the LDP had a significant impact on the budget formation. Further, we find that the LDP manipulated transfers from the central government to local governments presumably to maintain its electoral positions.