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Political budget cycles, incumbency advantage, and propaganda

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  • Frank Bohn
Abstract
This paper combines incumbency advantage and political budget cycle theory. An opportunistic politician is given two instruments: deficit‐financed transfers and propaganda. Unlike earlier analytical models, but in accordance with the empirical literature, government manipulations do actually improve re‐election chances. However, the optimal level of government manipulation depends on country characteristics, in particular the competence dispersion among potential candidates. This may explain why it is easier to detect political budget cycles in, for instance, developing countries or new democracies. Results are robust to alternative competence distribution and propaganda cost assumptions.

Suggested Citation

  • Frank Bohn, 2019. "Political budget cycles, incumbency advantage, and propaganda," Economics and Politics, Wiley Blackwell, vol. 31(1), pages 43-70, March.
    • Handle: RePEc:bla:ecopol:v:31:y:2019:i:1:p:43-70
    DOI: 10.1111/ecpo.12122
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    3. Batabyal, Amitrajeet A. & Beladi, Hamid, 2022. "A political-economy perspective on mayoral elections and urban crime," Socio-Economic Planning Sciences, Elsevier, vol. 79(C).
    4. Frank Bohn, 2018. "Political cycles: Beyond rational expectations," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-23, October.
    5. Lamar Crombach & Frank Bohn, 2024. "Uninformed voters with (im)precise expectations: Explaining political budget cycle puzzles," Economics and Politics, Wiley Blackwell, vol. 36(1), pages 275-311, March.
    6. Frank Bohn & Francisco José Veiga, 2019. "Political Budget Forecast Cycles," NIPE Working Papers 12/2019, NIPE - Universidade do Minho.
    7. Frank Bohn & Jan-Egbert Sturm, 2021. "Do expected downturns kill political budget cycles?," The Review of International Organizations, Springer, vol. 16(4), pages 817-841, October.
    8. Peter Spáč, 2021. "Pork barrel politics and electoral returns at the local level," Public Choice, Springer, vol. 188(3), pages 479-501, September.
    9. García, Israel & Hayo, Bernd, 2021. "Political budget cycles revisited: Testing the signalling process," European Journal of Political Economy, Elsevier, vol. 69(C).
    10. George Petrakos & Konstantinos Rontos & Luca Salvati & Chara Vavoura & Ioannis Vavouras, 2022. "Toward a political budget cycle? Unveiling long-term latent paths in Greece," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(5), pages 3379-3394, October.
    11. Wang, Xue & Bohn, Frank, 2019. "Pension reserve fund, political budget cycles and fiscal illusion," European Journal of Political Economy, Elsevier, vol. 56(C), pages 62-73.
    12. Paritosh Chandra Sinha, 2021. "Attention to the Election-Economics-Politics (EEP) Nexus in the Indian Stock Markets," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 13(1), pages 7-32, June.

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