Does Incrementalism Stem From Political Fragmentation: An Empirical Test

Budget is a kind of arrangement and plan for the use of public expenditure and fiscal income during a period. In advance, it indicates the expected scope and orientation of governments' activities. It also indicates the trend of public macroeconomic policies. Afterwards, it displays the effect of governments' activities on the economy. The budget of one country estimates the relative political power of different politicians and organizations. It also shows the relationship between the general beneficial coalitions and the special beneficial coalitions.As the emphasis of this paper, the incrementalism at first appears in the articles of Lindblom (1959) and Wildavsky (1964). The defined the incrementalism as the small and marginal adjustment in the decision-making process. In this article, we define the incermentalism as a rational climbing model. In this model, the administrators make the decisions according to evaluate the public goods continuously, which causes the small and incremental changes during the budget-making process. We begin with discussing about the process of budget. Then we use the definitions of Wildavsky for incrementalism and point that the final result of incrementalism is the result of the game between the majority and the opposition in the council. This result depends on the political power of two coalitions. The political fragmentation is the key factor deciding their political power.As for the methods, this article makes use of two methods to estimate the effect of the political fragmentation on the incrementalism. After deep discussion about the basic theory, two econometric models are presented. The present study analyzes the data in 90 French departements for an 8-year period and uses the fixed effect estimation and GMM estimation. The results find out that the incrementalism can occur in highly concentrated majority government or highly concentrated opposition government.The paper's new points are:the effective political power is regarded as one reason for incrementalism; we prove that in a government, the effective power of the majority is one reason of the incrementalism; we prove that in a government, the effective political power can explain the big or small change of public expenditure; we use two models in the empirical study and first use the growth rate of expenditure as variable in one model.The outline of this paper is as follows. Section 1 is the introduction, which introduces the background and the references; Section 2 discusses the influences of the political fragmentations and introduces the two theoretical models of this paper; Section 3 bases on the data of French departments, computes and explains the parameters of models; Section 4 gives the conclusion. Section 5 discusses the possible contributions of this paper to our budget system, which bases on our budget process and budget system reform.