Fiscal redistribution around elections when democracy is not “the only game in town”

Pantelis Kammas () and Vassilis Sarantides

Public Choice, 2016, vol. 168, issue 3, No 6, 279-311

Abstract: Abstract This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not “the only game in town”. According to our theoretical analysis, when democracy is not “the only game in town”, incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that “democracy works”, thereby preventing a reversion to an autocratic status quo ante at a time of the current regime’s extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975–2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income—through tax and spending policies—in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime.

Keywords: Elections; New democracy; Redistribution; Income inequality (search for similar items in EconPapers)
JEL-codes: D63 D72 E62 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Fiscal redistribution around elections when democracy is not “the only game in town” (2015)
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DOI: 10.1007/s11127-016-0363-2

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