The politics of state public expenditures in Mexico: The role of legislative fragmentation and divided government

Abstract

This article examines why and to what extent the degree of conflict that exists between state executives and the opposition in state legislatures (measured by the presence or absence of divided government), and the degree of fragmentation of partisan interests in state legislatures (measured by legislative fragmentation) alter the magnitude of state expenditures in Mexico. The study finds that both the presence of a divided government and the degree of legislative fragmentation do affect the magnitude of public expenditures executed by Mexican states. However, we also verify (...) increases in the effective number of legislative parties boost public expenditures when the party ruling the state executive does not hold more than fifty percent of seats in the state legislature. These effects on state spending are meaningful and statistically significant, and confirm the hypotheses of this study. This contribution does not only expand our understanding on the role of state legislatures in the scope of expenditures of state legislatures, but also offers information on why and to what extent legislative fragmentation is able to influence public policy.