BIROn - Birkbeck Institutional Research Online

    Political budget cycles in the European Union and the impact of political pressures: a dynamic panel regression analysis

    Efthyvoulou, Georgios (2010) Political budget cycles in the European Union and the impact of political pressures: a dynamic panel regression analysis. Working Paper. Birkbeck College, University of London, London, UK.

    [img]
    Preview
    Text
    7553.pdf - Published Version

    Download (477kB) | Preview

    Abstract

    This paper investigates the presence of political budget cycles (PBCs) in the European Union using a data set encompassing all 27 current member states over the period 1997-2008, and analyzes what may explain their variability across countries and over time. Conditioning on partisan considerations and several socio-economic variables, we find evidence in favor of a systematic electoral cycle in fiscal policy (i.e. spending and budget deficits are raised in election years). Furthermore, we find that PBCs are much larger in the Eurozone countries than in the countries that have not yet adopted the euro. Finally, we discuss an interesting area for future research, namely, fiscal policy manipulations are influenced by the information available to the market before elections. Specifically, we show that the size of PBCs is inversely proportional to the relative weight voters assign to non-economic issues prior to an election and positively correlated with the uncertainty over the electoral outcome. Once we account for these two features, the aforementioned differences between the Eurozone and the non-Eurozone countries seem to disappear.

    Metadata

    Item Type: Monograph (Working Paper)
    Keyword(s) / Subject(s): political budget cycles, fiscal policy, elections, opinion polls, European Union
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Management
    Depositing User: Administrator
    Date Deposited: 24 Jun 2013 11:00
    Last Modified: 11 Oct 2016 11:59
    URI: http://eprints.bbk.ac.uk/id/eprint/7553

    Statistics

    Downloads
    Activity Overview
    178Downloads
    96Hits

    Additional statistics are available via IRStats2.

    Archive Staff Only (login required)

    Edit/View Item Edit/View Item