Do Political Factors Affect Fiscal Consolidation? Evidence From Spanish Regional Governments

Alberto Vaquero-García, María Cadaval-Sampedro and Santiago Lago-Peñas
Authors registered in the RePEc Author Service: Santiago Lago-Peñas and Alberto Vaquero García

SAGE Open, 2022, vol. 12, issue 1, 21582440221085002

Abstract: This paper empirically examines the political factors behind the different fiscal consolidation paths across Spanish regions over the period 2004 to 2017. Spanish regions provide an interesting case study due to both the strong fiscal decentralization and the deep impact of the so-called “Great Recession†on subcentral budget constraints in Spain. The estimates confirm that governments react to fiscal imbalances by reducing expenditure growth, but this reaction depends on the electoral budget cycle and the results of elections. Fiscal consolidation tends to stop in election years and is boosted by changes in the incumbent. By contrast, neither ideology nor fragmentation of government systematically affects the dynamics of fiscal adjustment.

Keywords: fiscal consolidation; regional incumbents; public deficit; political determinants (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:sagope:v:12:y:2022:i:1:p:21582440221085002

DOI: 10.1177/21582440221085002

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