Separation of Powers and Political Budget Cycles

Jorge Streb () and Alejandro Saporiti

No 251, CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA

Abstract: From a theoretical viewpoint, political budget cycles (PBC) arise in equilibrium when rational voters are imperfectly informed about the incumbent's competency and the incumbent enjoys discretionary power over the budget. This paper focuses on the second condition, examining how executive discretion is affected by the budgetary process under separation of powers. We specifically model PBC in the composition of government spending. The main result is that effective checks and balances in the budgetary process curb PBC. The institutional features of the executive-legislature bargaining game, namely, the actual agenda-setting authority, the status quo location and the degree of legislative oversight and control of the implementation of the budgetary law, play critical roles for the existence and the size of PBC. These results are consistent with recent empirical findings, which show that PBC are more pronounced in developing countries, where there are also less effective checks and balances.

Keywords: Rational political budget cycles; budget composition; separation of powers; checks and balances; budgetary process. (search for similar items in EconPapers)
JEL-codes: D72 D78 (search for similar items in EconPapers)
Date: 2003-11
New Economics Papers: this item is included in nep-lam and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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https://www.ucema.edu.ar/publicaciones/download/documentos/251.pdf (application/pdf)

Related works:
Journal Article: Separation of powers and political budget cycles (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cem:doctra:251

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