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Defective democracy and the political budget cycle

Dongwon Lee and Sujin Min

Journal of Comparative Economics, 2021, vol. 49, issue 4, 947-961

Abstract: Using a panel of democracies from 1987 to 2016, this study examines the effect of a defective democracy on the political budget cycle. To separate defective democracies from embedded democracies, we apply cluster analysis to the central elements of democracy. We find that the political budget cycle is significant only in defective democracies. Our finding indicates that the electoral cycle can persist even though democracies become old and economies become advanced. We also find that, of the central elements of democracy, weak rule of law and an ineffective government mainly explain the political budget cycle in defective democracies.

Keywords: Political budget cycle; Election; Defective democracy; Rule of law (search for similar items in EconPapers)
JEL-codes: D72 E62 H62 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.jce.2021.04.009

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