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Overlapping political budget cycles

Dirk Foremny, Ronny Freier, Marc-Daniel Moessinger and Mustafa Yeter ()
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Dirk Foremny: University of Barcelona
Ronny Freier: Technical University of Applied Sciences Wildau
Marc-Daniel Moessinger: Centre for European Economic Research (ZEW Mannheim)
Mustafa Yeter: German Council of Economic Experts

Public Choice, 2018, vol. 177, issue 1, No 1, 27 pages

Abstract: Abstract We advance the literature on political budget cycles by testing for cycles in expenditures for elections to the legislative and the executive branches. Using municipal data, we identify cycles independently for the two branches, evaluate the effects of overlaps, and account for general year effects. We find sizable effects on expenditures before legislative elections and even larger effects before joint elections to the legislature and the office of mayor. In the case of coincident elections, we show that it is important whether the incumbent chief executive seeks reelection. To account for the potential endogeneity of that decision, we apply an IV approach using age and pension eligibility rules.

Keywords: Election cycles; Municipal expenditures; Legislative and executive elections; Instrumental variables approach (search for similar items in EconPapers)
JEL-codes: H11 H71 H72 H74 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s11127-018-0582-9

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