Elections, leaders, and the composition of government spending

Do elections allow voters to express their policy preferences, with change in government spending patterns following the election of a new leader? How long does it take for the composition of government spending to change following a change in leadership? Or, do significant spending changes precede (rather than follow) elections, with incumbents using significant changes in spending composition as an electoral tool? Using a dataset we created on government expenditure composition in 71 democracies over 1972–2009, we examine the relation between elections and significant changes in the composition of government spending. We find that leaders' replacements have no significant short-run effect on expenditure composition, even after controlling for various political and economic variables. Over the medium-term leadership changes are associated with larger changes in expenditure composition, but only in developed countries. We also find that election years are associated with larger expenditure composition changes in established democracies, but not in new democracies, which were found in our previous work to increase their overall level of expenditures in election years.

► Empirical relation of elections and changes in government spending composition
► Leaders' replacements have no significant short-run effect on spending composition.
► Such changes imply medium-term composition changes, but only in developed countries.
► Election years imply larger composition changes in old, but not new democracies.