Does legislative turnover adversely affect state expenditure policy? Evidence from Indian state elections

I examine the effect of legislative turnover on the size and composition of government expenditures in Indian state elections during 1980-2000. The paper finds that excessive turnover in Indian state elections results in an inefficient government expenditure policy. First, the higher the turnover, the larger is the size of government. Second, excessive turnover affects the allocative efficiency of the government expenditure by skewing the composition of government spending towards pure consumption expenditure and away from more productive investment expenditure. The findings imply that a lack of a proper commitment mechanism in political markets could be a source of inefficiency in government policy