Fiscal Forecast Manipulations and Electoral Results: Evidence from Portuguese Municipalities

Mamadou Boukari and Francisco Veiga

No 07/2020, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: This paper aims to evaluate the impact of budget forecast manipulations on election results using a sample that covers all 308 Portuguese municipalities over the period running from 1998 to 2017. The results reveal that incumbent mayors overestimate revenues and expenditures. Overstating the budget more on the revenue side, they end up with a deficit. We check whether this opportunistic behavior is electorally benefcial. The results provide little or no evidence that election-year manipulations of revenue forecasts affect the vote shares of the parties of the incumbent mayors. On the other hand, the opportunistic management of total and capital expenditure forecasts pays off, which is consistent with previous results for Portugal indicating that increased total and, mainly, capital expenditures lead to higher vote shares.

Keywords: Budget Forecast Errors; Elections; Municipalities; Portugal (search for similar items in EconPapers)
JEL-codes: D72 H72 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cdm and nep-pol
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