This study examines the respective impact of economic and political factors on
federal public expenditure by replicating the Frey and Schneider politico-economic
model with Canadian data from 1954 to 1992. We show that federal expenditure has
been sensitive to (a) the rate of unemployment and the real wage rate and (b) the
interplay of reelection and ideological influences. Although partisan cycles fail to
appear when pohtico-economic interactions are specified, following the general
Frey and Schneider model, they emerge when we adjust the general model to take
into account specific Canadian institutional features, namely, the existence of
minority governments, and the Quebec origin of the government leader.
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