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Political Budget Cycles in New versus Established Democracies

Author

Listed:
  • Adi Brender

    (Bank of Israel)

  • Allan Drazen

    (University of Maryland)

Abstract
Like other recent studies, we find a political deficit cycle in a large cross-section of countries, but show that this result is driven by the experience of “new democracies”. The political budget cycle in new democracies accounts for the finding of a budget cycle in larger samples that include these countries and disappears when they are removed from the larger sample. The political deficit cycle in new democracies accounts for findings in both developed and less developed economies, for the stronger cycle in weaker democracies, and for differences in the political cycle across governmental and electoral systems. Our findings may reconcile two contradictory views of pre-electoral manipulation, one that it is a useful instrument to gain voter support and a widespread empirical phenomenon, the other that voters punish rather than reward fiscal manipulation.

Suggested Citation

  • Adi Brender & Allan Drazen, 2005. "Political Budget Cycles in New versus Established Democracies," Bank of Israel Working Papers 2005.04, Bank of Israel.
    • Handle: RePEc:boi:wpaper:2005.04
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    political budget cycle; new democracy; fiscal manipulation;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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