The effects of fiscal autonomy on the size of public sector and the strength of political budget cycles in local expenditure

Monika Köppl Turyna, Grzegorz Kula, Agata Balmas and Kamila Waclawska
Authors registered in the RePEc Author Service: Monika Irena Köppl-Turyna

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze the effects of political business cycles and fiscal autonomy on the expenditure categories of Polish municipalities. Using System GMM technique, we find convincing evidence for strong political business cycles in almost all expenditure categories, and in particular for the categories of expenditure relevant for electoral success such as infrastructure and social expenditure. Transfers to municipalities from the central government accentuate the strength of the electoral cycles, but surprisingly are associated with lower expenditure levels outside of the election periods. The latter results are the main finding: fiscal autonomy although not necessarily reducing the levels of local expenditure, does reduce the level of political manipulation of the budgets.

Keywords: local expenditure; political business cycles; fiscal autonomy; decentralization (search for similar items in EconPapers)
JEL-codes: D72 H72 H75 H77 (search for similar items in EconPapers)
Date: 2015-03-01
New Economics Papers: this item is included in nep-cdm, nep-pbe, nep-pol and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:64202

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