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. © 2012 The Author(s).
CITATION STYLE
Klomp, J., & de Haan, J. (2013). Political budget cycles and election outcomes. Public Choice, 157(1–2), 245–267. https://doi.org/10.1007/s11127-012-9943-y
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