Political budget cycles and election outcomes

J.G. Klomp, J. de Haan

Research output: Contribution to journalArticleAcademicpeer-review

66 Citations (Scopus)

Abstract

This paper addresses two empirical questions. Is fiscal policy affected by upcoming elections? If so, do election-motivated fiscal policies enhance the probability of re-election of the incumbent? Employing data for 65 democratic countries over 1975–2005 in a semi-pooled panel model, we find that in most countries fiscal policy is hardly affected by elections. The countries for which we find a significant political budget cycle are very diverse. They include ‘young’ democracies but also ‘established’ democracies. In countries with a political budget cycle, election-motivated fiscal policies have a significant positive (but fairly small) effect on the electoral support for the political parties in government.
Original languageEnglish
Pages (from-to)245-267
JournalPublic Choice
Volume157
Issue number1-2
DOIs
Publication statusPublished - 2013

Keywords

  • economic-determinants
  • developing-countries
  • business cycles
  • fiscal-policy
  • growth
  • democracies
  • globalization
  • manipulation
  • institutions
  • deficits

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