Tariff increases over the electoral cycle: A question of size and salience

Michael Klien

European Journal of Political Economy, 2014, vol. 36, issue C, 228-242

Abstract: Research on the political budget cycle suggests that some budget items are more visible than others. Accordingly, the cycle will exert a varying impact on policy instruments of different salience. Using a panel data set of tariff decisions by Austrian local governments we identify a stable and sizable electoral cycle in water tariffs. Tariff increases are both less frequent and less strong before elections. The cycle effect is, however, not constant: Small increases are not affected by elections or even more likely. This is consistent with advances from prospect theory suggesting that visibility may depend on the size of a policy. Consequently, small tariff changes may not be salient, particularly if they are below inflation as a reference threshold.

Keywords: Tax salience; Electoral cycle; Tariffs (search for similar items in EconPapers)
JEL-codes: D71 D78 H7 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0176268014000780
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: https://EconPapers.repec.org/RePEc:eee:poleco:v:36:y:2014:i:c:p:228-242

DOI: 10.1016/j.ejpoleco.2014.08.004

Access Statistics for this article

European Journal of Political Economy is currently edited by J. De Haan, A. L. Hillman and H. W. Ursprung

More articles in European Journal of Political Economy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().