Do Democracies Have Different Public Policies than Nondemocracies?

Abstract

Estimates of democracy's effect on the public sector are obtained from comparisons of 142 countries over the years 1960-90. Based on three tenets of voting theory n that voting mutes policy preference intensity, political power is equally distributed in democracies, and the form of voting processes is important n we expect democracy to affect policies that redistribute, or economically favor the political leadership, or enhance efficiency. We do not find such differences. Instead democracies are less likely to use policies that limit competition for public office. Alternative modeling approaches emphasize the degree of competition, and deemphasize the form or even existence of voting processes.

Tax Systems in the World: An Empirical Investigation into the Importance of Tax Bases, Administration Costs, Scale and Political Regime

“…Existing work on the role of regime type is mostly concerned with specific aspects of tax structure, such as Musgrave's (1969) work on the indirect/direct tax mix and the more recent work on personal income rate structures by Mulligan, Gil and Sala-i-Martin (2004). At the empirical as well as at the theoretical level, the issue remains largely unexplored.…”

“…Some empirical work has recently considered the consequences of democracy for the structure of particular taxes, such as the personal income tax. For example, Mulligan, Gil and Sala-i-Martin (2004) conclude that democracies have flatter personal income tax structures than do non-democratic regimes. This interesting work, as well as other research on expenditure structure in different regimes, 4 does not use a complete representation of the fiscal system, and thus does not provide a foundation for estimating equations that can be used in the present investigation.…”

Is Fiscal Adjustment More Durable When The IMF is Involved?

“…In contrast, the literature found no relationship between political economy variables (political institutions, quality of bureaucracy, and so on) and the participation in an IMF-supported programme. In other words, public sector policies are essentially the same in democracies and nondemocracies (Mulligan et al, 2003).…”

“…First, the impact of cyclical conditions was strong in our sample -while pre-programmes real GDP grew on average by 1.5 percent in 1993-94, the rate more than doubled to almost 4 percent in 1997-99, after the end of IMF-supported programmes. Second, the components of the overall fiscal balance were public choice variables and voters decided how much tax they wanted to contribute and how they wanted the proceeds to be spent (Drazen, 2000;Mulligan et al, 2003). Third, debt sustainability constrained the fiscal stance: the deficits preferred by the electorate may not be financeable (Tanzi andSchuknecht, 1997 or Hansson andStuart, 2003).…”

Do authoritarian institutions mobilize economic cooperation?

“…Recent studies on the tax effort of countries and their tax mix have begun to pay attention to institutions as a significant source of cross-country variability, although dictatorships in all their forms have generally been neglected or simply included as a reference category to which democratic systems are compared in terms of the size and scope of public and revenue policies (Cheibub 1998;Boix 2003;Hausken et al 2004;Mulligan et al 2004). But dictatorships are not homogeneous; they differ in their institutional configuration as well: Some ban all kind of parties and representative institutions, while others create a single party; and others even take the form of quasi-democracies, allowing the existence of multiple parties within a legislature, regimes which are usually known as competitive authoritarian regimes, anocracies or electoral authoritarian regimes.…”