Public Investment and Re-election Prospects in Developed Countries

Margarita Katsimi and Vassilis Sarantides

No 2013004, Working Papers from The University of Sheffield, Department of Economics

Abstract: A growing body of literature suggests that office-motivated politicians manipulate fiscal policy instruments in order to seek their re-election. This paper directly examines the impact of the electoral manipulation of the level and composition of fiscal policy on incumbents’ re-election prospects. This impact is estimated through a panel of 21 OECD countries over the period of 1972-1999. Our results suggest that increased public investment during the term in office as well as a shift in expenditures toward public investment can improve re-election prospects. To the contrary, results seem to verify the assumption of low visibility of capital spending, since election year manipulation via public investment does not affect re-election prospects. We also find that voters disfavour politicians who create deficits during elections, while deficit creation over the term in office and preceding the election year (when it is financed by equal proportions of public investment and consumption expenditures) does not seem to affect re-election prospects.

Keywords: political budget cycles; elections; quality of public expenditure; public investment (search for similar items in EconPapers)
JEL-codes: D72 E62 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2013
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 (1)

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http://www.shef.ac.uk/economics/research/serps/articles/2013_004.html First version, 2013 (application/pdf)

Related works:
Journal Article: Public investment and reelection prospects in developed countries (2015)
Working Paper: Public Investment and Re-election Prospects in Developed Countries (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2013004

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