The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Recent work on the political economy of fiscal policy has asked how budgetary institutions affect fiscal outcomes. But what determines the budgetary institutions? In this paper I consider one such institution: the executive veto. A simple theoretical framework predicts that jurisdictions with more political actors spending from a common pool of tax resources will choose to empower their executives. Using an econometric framework to identify the exogenous variation in the number of districts, I present evidence from a cross-section of local governments in the United States that jurisdictions with more electoral districts are likely to have executives with veto powers.