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General or Central Government? Empirical Evidence on Political Cycles in Budget Composition Using New Data for OECD Countries

Niklas Potrafke ()

No 322, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: Previous studies used general government data to examine whether national governments’ electoral motives and ideology influenced budget composition in OECD countries. General government data includes, however, the state and local level. Using new data for general and central government over the period 1995–2016, I reexamine political cycles in budget composition. The results suggest that, both at the general and central government level, leftwing governments spent more on education and less on public services than rightwing governments. Defense expenditure was somewhat lower under leftwing than rightwing governments and in election years; especially in federal states. Effects of government ideology on the individual expenditure categories are larger at the central than general government level. Scholars need to re-examine results on ideology-induced effects that have been derived from general government data where central government data should have been used.

Keywords: General and central government; panel data models; OECD countries; electoral cycles; government ideology; partisan politics; budget composition (search for similar items in EconPapers)
JEL-codes: D72 D78 E60 H30 H50 C23 P16 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-mac, nep-pol and nep-pub
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Journal Article: General or central government? Empirical evidence on political cycles in budget composition using new data for OECD countries (2020) Downloads
Working Paper: General or Central Government? Empirical Evidence on Political Cycles in Budget Composition Using New Data for OECD Countries (2020) Downloads
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