Doubling down political budget cycles: The role of state-owned enterprises

Zareh Asatryan, Désirée I. Christofzik and Justus Nover

No 25-059, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We study the degree and nature of political budget cycles in public investments when two instruments are available: investments by core governments and, more indirectly, by state-owned enterprises (SOEs). While fiscal pressure on core budgets may induce politicians to shift election-induced investments to SOEs, voters' uncertainties in clearly attributing the benefits of SOE investments to incumbent politicians may encourage the opposite. Using administrative micro-data for over 10,500 SOEs and their public owners at the municipal level in Germany, we document substantial election cycles in both instruments. This suggests that German municipal councilors use investments broadly to enhance their re-election prospects. The total effect of elections on municipal investments in our sample is over EUR 1 billion for the pre-election year in each electoral cycle, while the past literature focusing only on core budgets would miss about a third of this effect.

Keywords: election cycles; core budgets; outsourcing; transparency (search for similar items in EconPapers)
JEL-codes: D72 H11 L32 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/333898/1/1945740957.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:333898

Access Statistics for this paper

More papers in ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().