The form of government and fiscal dynamics
European Journal of Political Economy 27 (2011), pp. 297-310
Using a combination of time series variation in oil prices and cross-section variation in the oil intensity of countries, this paper investigates whether exogenous shifts in the government revenues affect the government expenditures differently depending on the political institutions of the form of government. Comparing the fiscal policy dynamics in parliamentary and presidential systems, a main finding is that the government expenditures appear more responsive to shifts in the revenues when the form of government is presidential.