Elections related cycles in publicly supplied goods in Albania

Holger Kächelein, Endrit Lami and Drini Imami

No 71, BERG Working Paper Series from Bamberg University, Bamberg Economic Research Group

Abstract: The phenomena of manipulation of the economy by the incumbent for electoral purpose are called Political Business Cycles (PBC), introduced by Nordhaus (1975). Using policy control economic instruments, as fiscal and monetary instruments, government may manipulate the economy to gain electoral advantage by producing growth and decreasing unemployment before elections. In addition to increased public expenditures, also the production/supply of certain publicly provided goods may score improvements. In Albania, production and supply of electricity (for the time span of our analyzes) was controlled by KESH (Korporata Energjitike Shqiptare - Albanian Energy Corporation) which is a quasi- monopoly in the supply of electricity in Albania, and it is publicly run. Throughout the transition, supply of electricity, due to various technical and economic reasons, has not been stable, and characterized by systematic interruption for households and businesses users, affecting their well-being and performance (electricity is a main source of energy for households, including heating and cooking). Therefore, it seems so that there is an incentive and rationale for the incumbent to use also the provision of electricity to impress the voters before elections, beside of the classical instruments of expenditures. In this paper we analyze consumption, production and import of electricity in Albania. Our hypothesis is that before elections, electricity consumption may increase above usual levels, followed by a contraction after elections. In our analysis we use modern standard econometric approach, used widely for research related to PBC. By ARMA modelling it is possible to prove if elections can explain changes in electricity production, in addition to the past history of the variable and the random error term.

Keywords: Political Business Cycle; Electricity; Albania (search for similar items in EconPapers)
JEL-codes: D72 E32 H72 P26 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Election-Related Cycles in Publicly Supplied Goods in Albania (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bamber:71

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