Money and majorities in the Federal Republic of Germany: Evidence for a veto players model of government spending

I formulate a veto players model of policy making by coalition government in the Federal Republic of Germany. The model gives testable predictions about how patterns of federal spending respond to changes in government. Some of the predictions are consistent with conventional wisdom, namely that the SPD-FDP government decreased spending on right-wing items when it came to power in 1969, and the return of CDU-FDP coalition in 1982 produced a decline in leftwing spending. Other predictions are less intuitive. For example, there is no predicted increase in left-wing spending associated with the SPD-FDP coalition and no increase in right-wing spending with the CDU-FDP government. These predictions, and those of competing models, are tested using disaggregated budget data from fiscal years 1961-1989, controlling for category-specific effects and economic conditions. The data support the veto players model, and this support is robust to a wide variety of plausible assumptions about the parties' spending preferences.