Cultural politics: Exploring determinants of cultural expenditure

• The paper explores the determinants of cultural spending for Austria from 1967 to 2013.
• Determinants include GDP, ideology, periods and cycles of public finance.
• Lack of spending by the provincial governments is matched by the central government, underlining the federal structure of Austria.
• Applied methods include time series analysis, and several econometric estimation approaches.

The current paper explores the determinants of cultural expenditure for Austria during the period 1967–2013. While it is straightforward to assume a determining influence of GDP on cultural spending, other politico-economic determinants have regularly been hypothesized to exhibit an explanatory power in cultural politics. The econometric results of this paper provide further evidence that GDP is the main determinant of public cultural spending. Growth in GDP leads to increases in cultural spending, both in the short term as well as in the sense of a long-term, stable relationship. In addition, the estimations suggest that cultural spending increased faster after 1997. It thus seems that the restrictions of fiscal policies imposed by the Maastricht Treaty and, more recently, by the Fiscal Compact have not lead to a reduction of discretionary cultural spending in Austria. However, cultural spending of the central government is also significantly influenced by cultural expenditure of the provincial governments; the results indicate that the central government has balanced fluctuations of provincial spending which make up for about a half of total public spending (municipal expenditure is not considered in this paper). The ideology of the ruling party in government (the Federal Chancellor being a Social Democrat) was tested as a first political variable determining cultural spending. The estimations suggest that cultural spending was slightly higher in times of social-democratic governments. The paper also tests for the influence of the right-wing coalition government (2000–2006) on cultural spending. We do not find indications for a reduction of cultural spending during this period. The results also do not indicate that political (electoral) cycles influence public cultural spending.