Electoral opportunism and vertical fiscal imbalance

Osvaldo Meloni

Journal of Applied Economics, 2016, vol. 19, 145-168

Abstract: Evidence of political budget cycles from cross-country studies has been rationalized as coming from the voters’ cost to process the available information and asymmetric information. This explanation has also been adopted in most cross-province studies, leaving aside variables related to the incentive structure of fiscal federalism. This paper investigates electorally induced fiscal fluctuations in Argentina for the period 1985–2007. Provincelevel dynamic panel data reveal that vertical fiscal imbalances in subnational districts fuel fiscal expansion and changes in expenditure composition, favoring current expenditure to the detriment of investment, in election years. Vertical fiscal imbalances make electoral opportunism cheaper and more profitable.

Keywords: political budget cycle; vertical fiscal imbalance; opportunism; Argentina (search for similar items in EconPapers)
JEL-codes: D72 P16 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (11)

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https://ucema.edu.ar/publicaciones/download/volume19/meloni_appendix.pdf Online Appendix (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:19:y:2016:n:1:p:145-168

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