Dorian BALVIR

While fiscal rules are often viewed as an effective way to curb the deficit bias arising from, inter alia, partisan pressures in common-pool budget settings, much less is known about how their effects vary with partisan preferences. This paper fills that gap by estimating local projections for a panel of EU-27 countries over 1995-2019. We innovatively link COFOG expenditure categories with the Manifesto Project Database to study how political preferences condition the impact of tighter fiscal rules across spending functions. Our first result is that more stringent national fiscal rules are associated with lower public spending in the short-and medium-run. Digging deeper, we show that the recomposition of expenditure under tighter rules depends on governments' preferences: adjustment falls disproportionately on categories that are less favoured by the incumbent. These results are robust to alternative estimators, different definitions of the dependent variable, and placebo tests. Lastly, the cuts associated with stricter fiscal rules in low-preference government contexts are amplified when sovereign debt yields are higher.

DR LEO - Working paper 2022-13

The past two decades have witnessed a consistent rise in the proportion of women in the national governments of EU member states, partly attributed to policies aimed at fostering parity. The average representation of women has increased from 23.3% to 34.2%. The question of the impact of gender in the literature, despite lacking consensus, seems to suggest that women could behave differently with regard to risk aversion or even in terms of leverage over a group. This paper aims to delve into the potential influence of gender among government members on public policy. Using quarterly data from 2003 to 2021, we examine the relationship between the share of women in EU governments and its link to the management of public spending, mainly focusing on its cyclicality. Our findings indicate a positive correlation between an augmented presence of women near the budgetary decision-making process, specifically those holding economic positions in government, and an increase in the countercyclicality of fiscal policy. Furthermore, utilising annual data, we demonstrate that an upsurge in the representation of women in economic roles within government is linked to a reduction in procyclicality. Our results, robust across various specifications and sample changes, underscore that beyond the pursuit of equal representation, fostering gender parity in political spheres could contribute to enhanced fiscal policy management.