Political fragmentation, fiscal policy and economic growth in Indian States
We study how a fragmented political landscape affects fiscal policy and economic growth with a sample of 15 Indian States over the period 1980-2000. We measure state-level political fragmentation with an inverse Herfindahl index for party vote shares in the state legislature. Our results show that p...
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| Format: | Article |
| Language: | English |
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Università Carlo Cattaneo LIUC
2024-01-01
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| Series: | The European Journal of Comparative Economics |
| Online Access: | https://ejce.liuc.it/articles/ejce021.pdf |
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| _version_ | 1846149530022576128 |
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| author | Yogesh Uppal Thushyanthan Baskaran |
| author_facet | Yogesh Uppal Thushyanthan Baskaran |
| author_sort | Yogesh Uppal |
| collection | DOAJ |
| description | We study how a fragmented political landscape affects fiscal policy and economic growth with a sample of 15 Indian States over the period 1980-2000. We measure state-level political fragmentation with an inverse Herfindahl index for party vote shares in the state legislature. Our results show that political fragmentation distorts fiscal policy: it entails higher spending, lower revenues, and higher public debt. At the disaggregated level, political fragmentation leads to higher current and lower capital expenditures. These fiscal distortions, in turn, lower growth rates. We also find that informational issues play an important role in determining the effect of political fragmentation. |
| format | Article |
| id | doaj-art-5f2e8d1f620d40b68251cd44e35931ae |
| institution | Kabale University |
| issn | 1824-2979 |
| language | English |
| publishDate | 2024-01-01 |
| publisher | Università Carlo Cattaneo LIUC |
| record_format | Article |
| series | The European Journal of Comparative Economics |
| spelling | doaj-art-5f2e8d1f620d40b68251cd44e35931ae2024-11-29T14:45:06ZengUniversità Carlo Cattaneo LIUCThe European Journal of Comparative Economics1824-29792024-01-0120216119110.25428/1824-2979/02118242979Political fragmentation, fiscal policy and economic growth in Indian StatesYogesh UppalThushyanthan BaskaranWe study how a fragmented political landscape affects fiscal policy and economic growth with a sample of 15 Indian States over the period 1980-2000. We measure state-level political fragmentation with an inverse Herfindahl index for party vote shares in the state legislature. Our results show that political fragmentation distorts fiscal policy: it entails higher spending, lower revenues, and higher public debt. At the disaggregated level, political fragmentation leads to higher current and lower capital expenditures. These fiscal distortions, in turn, lower growth rates. We also find that informational issues play an important role in determining the effect of political fragmentation.https://ejce.liuc.it/articles/ejce021.pdf |
| spellingShingle | Yogesh Uppal Thushyanthan Baskaran Political fragmentation, fiscal policy and economic growth in Indian States The European Journal of Comparative Economics |
| title | Political fragmentation, fiscal policy and economic growth in Indian States |
| title_full | Political fragmentation, fiscal policy and economic growth in Indian States |
| title_fullStr | Political fragmentation, fiscal policy and economic growth in Indian States |
| title_full_unstemmed | Political fragmentation, fiscal policy and economic growth in Indian States |
| title_short | Political fragmentation, fiscal policy and economic growth in Indian States |
| title_sort | political fragmentation fiscal policy and economic growth in indian states |
| url | https://ejce.liuc.it/articles/ejce021.pdf |
| work_keys_str_mv | AT yogeshuppal politicalfragmentationfiscalpolicyandeconomicgrowthinindianstates AT thushyanthanbaskaran politicalfragmentationfiscalpolicyandeconomicgrowthinindianstates |