Resumen de A political look into budget deficits.The role of minority governments and oppositions
Albert Falcó-Gimeno, Ignacio Jurado
In this paper we argue that the opposition is a key actor to be taken into account to explain deficit outcomes. If governments are in legislative minority, they will have to bargain with the opposition, including when having to pass the annual budget law. We concentrate on one specific aspect of the latter, namely the financing method, and argue that the interests of the opposition on deficits shall be reflected in the annual deficit results. We develop a theoretical framework in which the opposition faces a trade-off. It has a short term interest in deficits because they can weaken governments, but a long term aversion to them because, as likely future government holders, they will possibly have to deal with the burden of increased debt. We prove empirically that opposition parties will affect deficit outcomes depending on their probability to rule in the next term and on the ability they have to weaken a current government with a deficit. We also find that after the mid-nineties results change, pointing at a higher contextual deficit-aversion constraining domestic politics reflected, for instance, in the Maastricht criteria.
