Do elections affect the composition of fiscal policy in developed, established democracies?

Katsimi, Margarita; Sarantides, Vassilis

doi:10.1007/s11127-010-9749-8

Cited by 122 publications

(120 citation statements)

References 66 publications

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“…In contrast, Block (2002) and Vergne (2009) provide evidence that politicians in developing countries shift the composition of spending towards current expenditure and away from capital expenditure. Similar findings are obtained by Katsimi and Sarantides (2012) for a sample of OECD countries. The implication of that study is that policymakers seem to provide immediate benefit to voters by cutting current taxes, whereas capital spending falls.…”

Section: Introductionsupporting

confidence: 86%

Fiscal redistribution around elections when democracy is not “the only game in town”

Kammas

Sarantides

2016

Public Choice

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This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not ''the only game in town''. According to our theoretical analysis, when democracy is not ''the only game in town'', incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that ''democracy works'', thereby preventing a reversion to an autocratic status quo ante at a time of the current regime's extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975-2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income-through tax and spending policies-in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime.

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Section: Introductionsupporting

confidence: 86%

Fiscal redistribution around elections when democracy is not “the only game in town”

Kammas

Sarantides

2016

Public Choice

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“…They argue that shifts in public expenditure from one spending category to another spending category allow incumbents to signal either their competence or their preferences to the electorate. Empirically, election motivated expenditure shifts have been documented by Katsimi and Sarantidis (2012). They find that (predetermined) elections shift public spending towards current expenditures at the cost of public investment, while they do not affect overall government expenditure.…”

Section: Electoral Cyclesmentioning

confidence: 99%

Ideology and redistribution through public spending

Herwartz

Theilen

2017

European Journal of Political Economy

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For a panel of OECD economies (1980OECD economies ( -2013 we analyse the scope of government ideology to shape patterns of public expenditures. To address if public expenditures are used to channel redistributive outcomes, we adopt a flexible panel error correction model and proceed in two steps: Firstly, we analyse if ideological positions matter for the sizing of the public sector. Secondly, we address the actual impact of government ideology on two disjoint categories of public expenditure that are characterized by distinguished redistributive effects. Under both, left-wing and right-wing governments, public spending shows progressively redistributive effects which are indirectly channelled through their policy response to changing macroeconomic, fiscal and demographic fundamentals. While right-wing governments act progressively redistributive under favourable socio-economic conditions, their left-wing counterparts do so under unfavourable conditions. Comparing the two effects in terms of their explanatory content, the latter is found stronger than the former.JEL classification: H53, H87, I18, D72, F13, F60, C22, C23

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“…He finds that the relative importance of non-economic issues prior to elections and the uncertainty over the electoral outcome can to a large extent explain the variability in the sizes of PBCs across and within the EU countries. Katsimi and Sarantides (2012) examine the impact of elections on different types of fiscal expenditure and revenue for a sample of 19 'old' democracies over the period 1972-1999. They report that elections shift the composition of public expenditures towards current expenditures and away from capital expenditures.…”

Section: Previous Studiesmentioning

confidence: 99%

Political budget cycles and election outcomes

2012

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This paper addresses two empirical questions. Is fiscal policy affected by upcoming elections? If so, do election-motivated fiscal policies enhance the probability of re-election of the incumbent? Employing data for 65 democratic countries over 1975-2005 in a semi-pooled panel model, we find that in most countries fiscal policy is hardly affected by elections. The countries for which we find a significant political budget cycle are very diverse. They include 'young' democracies but also 'established' democracies. In countries with a political budget cycle, election-motivated fiscal policies have a significant positive (but fairly small) effect on the electoral support for the political parties in government.

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Do elections affect the composition of fiscal policy in developed, established democracies?

Abstract: Political budget cycles, Elections, Composition of fiscal policy, Quality of public expenditure, D72, E62,

Cited by 122 publications

References 66 publications

Fiscal redistribution around elections when democracy is not “the only game in town”

Fiscal redistribution around elections when democracy is not “the only game in town”

Ideology and redistribution through public spending

Political budget cycles and election outcomes

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