Do democratic governments provide more goods and services?

• Autor(a) principal: Cruz, Manuel Abraul Rosa
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/29264
• topic: Democracy; Redistribution; Government consumption; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This thesis studies the relationship between democracy and government consumption, through the lenses of the median voter model of democratic redistribution developed by Meltzer and Richard. Taking a large sample covering countries across all regions of the world for the 1960-2017 period, I estimate a positive effect of democratization on government consumption, controlling for country and year fixed effects. However, these results are not robust, as high levels of significance are not retained once I take the dynamics of government consumption and the Nickel bias into account. Given potential issues of endogeneity, I also carry out a two-stage least squares (2SLS) strategy, by using regional levels of democracy as an instrument, and my results do not change substantively. The lack of definitive conclusions arising from my empirical analysis suggests the relationship between democracies and government consumption may be more ambiguous than the median voter model of redistribution implies. If, for instance, democracy is “captured” by the elites, levels of redistribution might not be determined by the newly enfranchised segments of the population. Thus, I also discuss some of the reasons why recently democratized nations should not necessarily be expected to increase their levels of government consumption.