Veto players and the structure of budgets in advanced industrialized countries

Abstract

Abstract. This article tests expectations generated by the veto players theory with respect to the over time composition of budgets in a multidimensional policy space. The theory predicts that countries with many veto players (i.e., coalition governments, bicameral political systems, presidents with veto) will have difficulty altering the budget structures. In addition, countries that tend to make significant shifts in government composition will have commensurate modifications of the budget. Data collected from 19 advanced industrialized countries from 1973 to 1995 confirm these expectations, even when one introduces socioeconomic controls for budget adjustments like unemployment variations, size of retired population and types of government (minimum winning coalitions, minority or oversized governments). The methodological innovation of the article is the use of empirical indicators to operationalize the multidimensional policy spaces underlying the structure of budgets. The results are consistent with other analyses of macroeconomic outcomes like inflation, budget deficits and taxation that are changed at a slower pace by multiparty governments.