Voting behavior and budget stability

Cristina Vicente, Ana-María Ríos and María-Dolores Guillamón

Revista de Contabilidad - Spanish Accounting Review, 2013, vol. 16, issue 1, 46-52

Abstract: The aim of this paper is to analyze how the implementation of the Budgetary Stability Law has affected Political Budget Cycles generated by Spanish local governments. Specifically, we study whether the evolution of debt, budget deficit, capital spending and current spending over the electoral cycle has changed after the introduction of this law. We use a sample of 132 Spanish municipalities with more than 50,000 inhabitants (including the provincial capitals) during the period 1995–2009. Our results show that the Budgetary Stability Law has avoided electoral cycles in debt. On the contrary, the adoption of this law has not mitigated the incumbents’ incentives to manipulate deficit, capital spending and current spending with electoral aims. Nevertheless, it has caused a change in the way in which mayors manipulate fiscal policy over the electoral cycle. The opportunistic expansion covered both preelectoral year and the electoral year before the implementation of this fiscal rule, while after that, deficit and spending increases are confined in the election year.

Keywords: Budgetary Stability Law; Electoral cycles; Local governments; Ley de Estabilidad Presupuestaria; Ciclos electorales; Gobiernos locales (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:spacre:v:16:y:2013:i:1:p:46-52

DOI: 10.1016/S1138-4891(13)70005-0

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