Calculating Budget Efficiency as a Measure of Executive-Legislative Conflict

This paper brings a public finance perspective to illustrate one of the most controversial aspects of Executive-legislative conflict: the way presidents bargain budgets with Legislatures. Budget bargaining has a series of rules, dynamics and mechanisms which determine the ways in which Presidents push for their public finance agenda through a cooperative or adversarial Legislature. Budget efficiency is defined as the average rate of changes across all stages of the budget in that given year: during formulation, approval or implementation. A budget is more efficient if it shows a lower average of budgetary changes (in other words, what you ask for is what it gets approved and what you spend). Other things equal, it is expected that presidents with majoritarian congressional support would see minimal amendments during the legislative approval stage, but behind the door political agreements could be reflected during budget formulation or implementation. By contrast, presidents confronting fragmented legislatures would probably see more amendments during the congressional bargaining but fewer disagreements at formulation or implementation stages. We test the workings of this proposed instrument with the case of Ecuador, a country that has moved from a situation of extreme partisan fragmentation (1979-2005) to one of a single party majority and extensive budgetary powers (2006-2016). Using an extensive dataset tracking budget allocations made to all ministries at all stages of the budget process, we illustrate how budget efficiency tends to be lower when presidents lack a congressional majority (larger amendments reflect greater political bargains), whereas budgetary efficiency tends to be higher during unified governments. Going beyond the Ecuadorian case, the paper discusses the theoretical and methodological contributions of this measure to advance our knowledge of executive-legislative conflict in comparative perspective.