Political Business Cycles at the Municipal Level

Francisco Veiga and Linda Veiga

No 4/2004, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: This article tests for the existence of rational political business cycles models using a large and unexplored data set of Portuguese municipalities. The data set is well-suited for this purpose because it provides a high level of detail on expenditure items, because Portuguese municipalities are homogeneous with respect to policy instruments and institutions and follow an exogenously determined election schedule. Estimation results clearly reveal the existence of opportunistic behaviour by local governments. Expenditures increase in pre-election periods, especially on items that are highly visible to the electorate (e.g., highways and streets). This suggests an effort to signal competence and improve chances of re-election.

Keywords: Political business cycles; public finance; local governments. (search for similar items in EconPapers)
JEL-codes: D72 D78 H72 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Related works:
Journal Article: Political business cycles at the municipal level (2007)
Working Paper: Political business cycles at the municipal level (2004)
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