National elections and sub-national electoral cycles: Do strong fiscal rules matter in Europe?

Antonia Lopez Villavicencio () and Hugo Oriola ()
Additional contact information
Antonia Lopez Villavicencio: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique
Hugo Oriola: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

Abstract: This paper investigates Political Business Cycles during national elections across European Union countries and their subnational regions from 1995 to 2022, with a focus on the role of national and supranational fiscal rules. We find robust evidence that national elections are associated with increased regional public spending and reduced income and wealth tax rates. While strong fiscal rules tend to constrain or have limited effect on spending-related PBCs, they simultaneously incentivize tax-based fiscal manipulation, indicating a shift in electoral strategies from expenditure to taxation. This pattern holds across most European countries at both national and regional levels, with variations depending on specific electoral and political systems. We also show that right-wing incumbents engage in both public spending and tax-based opportunistic PBCs, while left-wing incumbents primarily focus on tax-based manipulations. Furthermore, newly elected left-wing incumbents pursue fiscal conservatism, whereas right-wing incumbents typically maintain the fiscal status quo.

Keywords: Elections; Fiscal rules; Political business cycle; National and regional politics; European Union (search for similar items in EconPapers)
Date: 2025-03-07
Note: View the original document on HAL open archive server: https://hal.science/hal-05002552v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05002552v1/document (application/pdf)

Related works:
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:hal:wpaper:hal-05002552

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().