Government Partisanship and Managing the Economy: Japan and Sweden in Comparative Perspective
Article first published online: 21 DEC 2005
Volume 19, Issue 1, pages 75–97, January 2006
How to Cite
KATO, J. and ROTHSTEIN, B. (2006), Government Partisanship and Managing the Economy: Japan and Sweden in Comparative Perspective. Governance, 19: 75–97. doi: 10.1111/j.1468-0491.2006.00304.x
- Issue published online: 21 DEC 2005
- Article first published online: 21 DEC 2005
It is generally taken for granted that countries governed by leftist governments expand social policies and have an affinity for active fiscal policy that implies higher tolerance of deficit-ridden budgets. In contrast, conservative governments are taken to be less likely to favor welfare expansion, especially when it has negative fiscal consequences. We challenge this conventional wisdom by comparing the reactions of the Swedish and Japanese governments to economic crises during the 1990s. The puzzle is that the Social Democratic governments in Sweden were able to reduce ballooning budget deficits and thus bring the economy back into balance, while still having one of the largest public sectors in the developed world. In contrast, the conservative Liberal Democratic Party governments in Japan have been unable to redress their deficit problems despite having one of the smallest public sectors among the Organisation for Economic Co-operation and Development countries. We argue that this can be explained by taking into consideration that governments’ tax and spending policies are influenced by bureaucratic structures and institutionally driven public beliefs. By comparing Japan and Sweden, we show how political parties actively seek to make their policy stances permanent by structuring taxation and expenditure policies to create institutionalized support for their policy preferences.