Party system nationalization, presidential coalitions, and government spending

• This paper models the effect of party nationalization on government expenditures.
• Non-targetable expenditures will increase if party system is more nationalized.
• Targetable expenditures will increase if party system becomes more regionalized.
• This effect is conditional to the size of the president's coalition.
• Transfers will increase if the size of the president's coalition decreases, even if party nationalization is high.

This paper argues that there is a strong relationship between geographical patterns of political parties' electoral performance and the composition of central government expenditures. When party system nationalization is high, the composition of spending will focus more on non-targetable expenditures, while targetable expenditures increase as the party system distribution of votes across different districts becomes less homogenous. However, the effect of party nationalization on spending type is conditioned by the size of the presidential coalition; targeted transfers will increase if the coalition size decreases, even if party nationalization is high. I find support for these hypotheses with an empirical analysis of district-level electoral and government expenditure data for several countries in Latin America between 1990 and 2006.