Economics at your fingertips  

Temporal aggregation in political budget cycles

Jorge Streb (), Daniel Lema () and Pablo Garofalo

Economía Journal, 2012, vol. Volume 13 Number 1, issue Fall 2012, 39-78

Abstract: We build a panel with quarterly data from Latin American and OECD countries over the 1980-2005 period. Annual data strongly underestimate the effect of political budget cycles (PBCs) when a pre-electoral fiscal expansion is followed by a post-electoral contraction, since the effects cancel out in the calendar year of elections, but not in the four quarters up to elections. Quarterly data show there is a significant fiscal expansion in the four pre-electoral quarters that extends, perhaps, to the first post-electoral quarter. In the next three post-electoral quarters, there is a compensating fiscal contraction only in Latin America, so PBCs contributed to public debt build-up in the OECD. Our results contradict a widespread consensus on PBCs being only a developing country phenomena - a conclusion which might have been affected by temporal aggregation - and imply that studies of electoral cycles should be done from now on with quarterly, not annual, data.

Keywords: political budget cycles; pre- and post-electoral effects; temporal aggregation; checks and balances (search for similar items in EconPapers)
JEL-codes: D72 D78 H60 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (15) Track citations by RSS feed

Downloads: (external link)

Related works:
Working Paper: Temporal aggregation in political budget cycles (2009) Downloads
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:

Access Statistics for this article

More articles in Economía Journal from The Latin American and Caribbean Economic Association - LACEA
Bibliographic data for series maintained by LACEA ().

Page updated 2021-02-20
Handle: RePEc:col:000425:010031