Economics at your fingertips  

Indirect political budget cycles: Evidence from Chilean municipalities

Alejandro Corvalan (), Paulo Cox () and Rodrigo Osorio

Journal of Development Economics, 2018, vol. 133, issue C, 1-14

Abstract: Political budget cycles have been studied at the national and local level, separately. However, when local governments depend on national resources, the central government may have incentives to manipulate intergovernmental transfers to favor politically aligned mayors, in order to use their help to mobilize voters in the next national election. This generates an indirect Political Budget Cycle (iPBC). This paper documents the presence of an iPBC in Chile. We show that, during municipal election years, the government increases the overall amount of transfers to municipalities (local governments), and that these additional resources are allocated to the politically aligned mayors. We also report that transfers to aligned mayors are higher when the local races are tighter, suggesting that the government prefers to deviate resources towards swing municipalities. Finally, we show that transfers are correlated with municipal spending during electoral years, and with both local and national political electoral outcomes.

Keywords: Political budget cycles; Intergovernmental transfers; Local governments; Elections; Chile (search for similar items in EconPapers)
JEL-codes: H72 D72 D78 C23 C25 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

Access Statistics for this article

Journal of Development Economics is currently edited by M. R. Rosenzweig

More articles in Journal of Development Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-04-29
Handle: RePEc:eee:deveco:v:133:y:2018:i:c:p:1-14