Nupia Oskar - Working Papers

Based on common-pool problem theories, empirical studies have tested whether the number of legislative parties positively affects government spending. The literature has found that this effect systematically varies across different groups of countries (OECD versus non-OECD, presidential versus parliamentary regimes). Based on a legislative pork-barrel negotiation model, this paper claims that the relative negotiating power of the governing party and the other parties in a governing coalition/legislature can explain this systematic difference. In particular, we show that when all legislative power is concentrated in the governing party, then the number of parties in the coalition/legislature has no effect on pork barrel spending. Moreover, under these circumstances only the degree of ideological polarization within the legislature affects (positively) the level of spending. Only when bargaining power is not entirely concentrated in the governing party does the number of parties positively affect pork barrel spending. Additionally, this effect increases as the governing party’s bargaining power decreases. Two elements, absent in the previous literature, drive our results. First, we explicitly introduce a governing party into the budget negotiation process. Second, we incorporate the idea that, most of the time, distributive policy is used by the governing party to promote ideologically based public policies. Our results coincide well with some of the stylized differences found between presidential and parliamentary regimes.

The empirical literature has come to no agreement about the effect of legislative fragmentation on fiscal outcomes – the so-called weak government hypothesis. With the aim of reconciling the empirical evidence with theory, in this paper we discuss and test a new hypothesis about this relationship: that fragmentation should matter for public spending only to the extent that the degree of polarization is high enough. Our results for presidential democracies show that, provided that there is some degree of polarization, a marginal change in the level of fragmentation in the governing coalition affects positively the size of the budget. Moreover, no effect of fragmentation is found in the absence of polarization. We also find that what matters for fiscal policy in presidential democracies is the degree of fragmentation and polarization within the governing coalition, rather than in the legislature at large. For parliamentary democracies we do not find a clear support for our hypothesis. Our results suggest interesting differences between presidential and parliamentary systems.

In this paper, we study how between-group wealth and size heterogeneity affect success probabilities as well as aggregate rent-seeking efforts when two groups compete for the allocation of a pure public good. Unlike with previous models, we measure the utility cost of rent-seeking in terms of the loss in private consumption confronting individuals when contributing to this activity. This allows us to escape from most of the neutrality results found in the literature, and to offer new and sensible results regarding the effect of group heterogeneity on rent-seeking efforts. Our model predicts that the total sum of rent-seekers and their between-group distribution do affect group success probabilities and aggregate rent-seeking efforts. Our model also predicts that it is possible to observe a poorer group being more successful than a richer group due to the former having a larger group-size. On the other hand, it shows that greater between-group wealth equality does not necessarily imply more aggregate rent-seeking efforts. The existence of group size asymmetries plays a key role in determining this effect.

I study whether a redistribution of wealth affects the private provision of public goods when the individual marginal rates of substitution (MRS) between public and private goods are assumed to change as individual wealth changes. I prove that under these circumstances, the neutrality theorem no longer holds. For a significant set of strictly convex preferences, I also show that a progressive redistribution of wealth always increases the aggregate provision of the public good if, after a redistribution, the changes in the MRS of those individuals who place less value on the public good are sufficiently large.