Checks and Balances on Political Budget Cycles: Cross-Country Evidence

Jorge M. Streb, Daniel Lema and Gustavo Torrens

Kyklos, 2009, vol. 62, issue 3, pages 426-447

Abstract: Previous empirical work on political budget cycles (PBCs) implicitly assumes the executive has full discretion over fiscal policy. Instead, we ask what happens when legislative checks and balances limit executive discretion. We find that legislative checks and balances moderate PBCs in countries with high compliance with the law. More effective checks and balances help to explain why cycles are weaker in developed countries and in established democracies. When the discretional component of executive power is isolated, there are significant cycles in all democracies. Copyright 2009 Blackwell Publishing Ltd.

Date: 2009
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