LEGISLATIVE INFLUENCES IN JAPANESE BUDGETARY POLITICS

Following World War II (W.W.II), Japan adopted a democratic parliament ary system. Since its formation in 1955 the Liberal Democratic Party ( LDP) had monopolized Japanese legislature (Diet) for over 35 years. Ho wever, it is said that at the center of the budgetary process was the Ministry of Finance (MOF). Elite bureaucrats rather than politicians a re typically seen as the agenda-setter. The action of politicians, in particular members of the LDP, to influence the budgetary resource all ocation has been largely unexamined. This paper empirically examines t he influence of the LDP on the supplementary budget formation and on t he revenue-sharing. We find that the LDP had a significant impact on t he budget formation. Further, we find that the LDP manipulated transfe rs from the central government to local governments presumably to main tain its electoral positions.