Dynamics of Political Budget Cycle

Ganesh Manjhi () and Meeta Mehra ()

MPRA Paper from University Library of Munich, Germany

Abstract: Using the method of optimal control, when an incumbent politician derives utility from voting support and dis-utility from budgetary deficit, the equilibrium time paths of both voting support and budgetary deficit are characterized in a finite time horizon under complete information. The incumbent politician may be an opportunist, in that she/ he is interested in garnering votes for herself/ himself, and manipulates budgetary deficit to achieve this, or else she/ he may be partisan, that is, characterized by heterogenous preferences, reflecting preferences for specific economic policies. The citizen-voters vote for the opportunist as well as the partisan incumbent. However, they reject the same when there is a sufficiently strong anti-incumbency in the opportunist case. The level of voting support obtained in case of both opportunist and partisan is found to be positive and rising over time, but running the budgetary deficit will be costlier for the economy in the former case than the latter. That is, per unit votes garnered by raising the budgetary deficit as compared to the benchmark deficit are lower when the incumbent is an opportunistic than when she/ he is partisan.

Keywords: Opportunist Incumbent; Partisan Incumbent, Citizen Voters, Budgetary Deficit, Political Economy, Political Budget Cycles; Fiscal Policy; Anti-incumebency (search for similar items in EconPapers)
JEL-codes: E3 E6 H3 H7 (search for similar items in EconPapers)
Date: 2015-10-10
New Economics Papers: this item is included in nep-cdm, nep-mac, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/68791/1/MPRA_paper_68791.pdf original version (application/pdf)

Related works:
Journal Article: Dynamics of Political Budget Cycle (2019)
Working Paper: Dynamics of Political Budget Cycle (2016)
Working Paper: Dynamics of Political Budget Cycle (2016)
Working Paper: Dynamics of Political Budget Cycle
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:68791

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().