Fiscal restraints by advisors

Shun ichiro Bessho; Kimiko Terai

doi:10.1007/s10101-013-0127-0

Fiscal restraints by advisors

Shun ichiro Bessho, Kimiko Terai

Faculty of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

This study investigates the role of fiscal advisors in maintaining government fiscal discipline when the advisor's appointment is determined endogenously. Our theoretical model shows that an incumbent politician has an incentive to employ an external advisor as a commitment device for fiscal discipline before being aware of his own competence level. The advisor acts as a restraint on public expenditure, which works to control the incumbent politician's ex post overspending to buy votes. Our empirical analysis supports this hypothesis in the Japanese case where governments with directors from the central government tend to spend less.

Original language	English
Pages (from-to)	205-232
Number of pages	28
Journal	Economics of Governance
Volume	14
Issue number	3
DOIs	https://doi.org/10.1007/s10101-013-0127-0
Publication status	Published - 2013 Aug

Keywords

Delegation of policy making
Fiscal restraints
Personnel interchange
Re-election

ASJC Scopus subject areas

Business and International Management
Economics, Econometrics and Finance(all)

Access to Document

10.1007/s10101-013-0127-0

Cite this

@article{4db4edc36fb8416b824fec50b207dbfc,

title = "Fiscal restraints by advisors",

abstract = "This study investigates the role of fiscal advisors in maintaining government fiscal discipline when the advisor's appointment is determined endogenously. Our theoretical model shows that an incumbent politician has an incentive to employ an external advisor as a commitment device for fiscal discipline before being aware of his own competence level. The advisor acts as a restraint on public expenditure, which works to control the incumbent politician's ex post overspending to buy votes. Our empirical analysis supports this hypothesis in the Japanese case where governments with directors from the central government tend to spend less.",

keywords = "Delegation of policy making, Fiscal restraints, Personnel interchange, Re-election",

author = "Bessho, {Shun ichiro} and Kimiko Terai",

note = "Funding Information: The authors thank editor Amihai Glazer, the anonymous referee, Takanori Adachi, Hideki Konishi, Masashi Nishikawa, Yukihiro Nishimura, Sung Hyun Whang, and seminar participants at Aoyama Gakuin University, Yokohama National University, Waseda University, the Annual Meeting of Japanese Economic Association, and the Fall Conference of the Korean Association of Public Finance for their helpful comments and suggestions. Financial support by Hosei University and KAKENHI (22530304) are gratefully acknowledged. ",

year = "2013",

month = aug,

doi = "10.1007/s10101-013-0127-0",

language = "English",

volume = "14",

pages = "205--232",

journal = "Economics of Governance",

issn = "1435-6104",

publisher = "Springer Verlag",

number = "3",

}

TY - JOUR

T1 - Fiscal restraints by advisors

AU - Bessho, Shun ichiro

AU - Terai, Kimiko

N1 - Funding Information: The authors thank editor Amihai Glazer, the anonymous referee, Takanori Adachi, Hideki Konishi, Masashi Nishikawa, Yukihiro Nishimura, Sung Hyun Whang, and seminar participants at Aoyama Gakuin University, Yokohama National University, Waseda University, the Annual Meeting of Japanese Economic Association, and the Fall Conference of the Korean Association of Public Finance for their helpful comments and suggestions. Financial support by Hosei University and KAKENHI (22530304) are gratefully acknowledged.

PY - 2013/8

Y1 - 2013/8

N2 - This study investigates the role of fiscal advisors in maintaining government fiscal discipline when the advisor's appointment is determined endogenously. Our theoretical model shows that an incumbent politician has an incentive to employ an external advisor as a commitment device for fiscal discipline before being aware of his own competence level. The advisor acts as a restraint on public expenditure, which works to control the incumbent politician's ex post overspending to buy votes. Our empirical analysis supports this hypothesis in the Japanese case where governments with directors from the central government tend to spend less.

AB - This study investigates the role of fiscal advisors in maintaining government fiscal discipline when the advisor's appointment is determined endogenously. Our theoretical model shows that an incumbent politician has an incentive to employ an external advisor as a commitment device for fiscal discipline before being aware of his own competence level. The advisor acts as a restraint on public expenditure, which works to control the incumbent politician's ex post overspending to buy votes. Our empirical analysis supports this hypothesis in the Japanese case where governments with directors from the central government tend to spend less.

KW - Delegation of policy making

KW - Fiscal restraints

KW - Personnel interchange

KW - Re-election

UR - http://www.scopus.com/inward/record.url?scp=84887180963&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84887180963&partnerID=8YFLogxK

U2 - 10.1007/s10101-013-0127-0

DO - 10.1007/s10101-013-0127-0

M3 - Article

AN - SCOPUS:84887180963

SN - 1435-6104

VL - 14

SP - 205

EP - 232

JO - Economics of Governance

JF - Economics of Governance

IS - 3

ER -

Fiscal restraints by advisors

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this