IDEAS home Printed from https://ideas.repec.org/a/ids/ijepee/v5y2012i2p168-182.html
   My bibliography  Save this article

Democratic learning and fiscal rules in the political budget cycles of the CEE countries

Author

Listed:
  • Nadezda Stanova

Abstract

Political economy literature acknowledges the importance of democratic learning and of fiscal rules in preventing politically driven deficits. This paper investigates the role of these factors for the Political Budget Cycles in the ten Central and East European (CEE) countries from 1990 to 2010. Detailed information on democratic parliamentary elections is combined with quantitative data on the strength of the fiscal rules. Results of dynamic panel regressions show that with the increasing democratic experience of the voters the opportunistic budget cycle has dampened. Moreover, there is empirical support for the view that strengthening fiscal rules somewhat reduced the scope for opportunistic manipulations. On the other hand, consolidation episodes did not preclude politically driven cycles.

Suggested Citation

  • Nadezda Stanova, 2012. "Democratic learning and fiscal rules in the political budget cycles of the CEE countries," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 5(2), pages 168-182.
    • Handle: RePEc:ids:ijepee:v:5:y:2012:i:2:p:168-182
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=48501
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brender, Adi & Drazen, Allan, 2005. "Political budget cycles in new versus established democracies," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1271-1295, October.
    2. Shanna Rose, 2006. "Do fiscal rules dampen the political business cycle?," Public Choice, Springer, vol. 128(3), pages 407-431, September.
    3. Jens Hölscher & Mariusz Jarmuzek & Roman Matousek & Eva Katalin Polgar, 2006. "Fiscal Transparency in Transition Economies," CASE Network Studies and Analyses 0328, CASE-Center for Social and Economic Research.
    4. Mathilde Maurel, 2006. "The Political Business Cycles in the EU enlarged," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00267475, HAL.
    5. Mark Hallerberg & Lúcio Vinhas de Souza & William Roberts Clark, 2002. "Political Business Cycles in EU Accession Countries," European Union Politics, , vol. 3(2), pages 231-250, June.
    6. Shi, Min & Svensson, Jakob, 2006. "Political budget cycles: Do they differ across countries and why?," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1367-1389, September.
    7. Marcela Eslava, 2006. "The Political Economy of Fiscal Policy: Survey," Research Department Publications 4487, Inter-American Development Bank, Research Department.
    8. Srđan Redžepagić & Matthieu Llorca, 2007. "Does Politics Matter in the Conduct of Fiscal Policy? Political Determinants of the Fiscal Sustainability: Evidence from Seven Individual Central and Eastern European Countries (CEEC)," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 54(4), pages 489-500, December.
    9. Marcela Eslava, 2006. "The Political Economy of Fiscal Policy: Survey," Research Department Publications 4487, Inter-American Development Bank, Research Department.
    10. Allan Drazen, 2001. "The Political Business Cycle after 25 Years," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 75-138, National Bureau of Economic Research, Inc.
    11. John Marangos, 2007. "The shock therapy model of transition," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 1(1), pages 88-123.
    12. Adi Brender & Allan Drazen, 2007. "Electoral Fiscal Policy in New, Old, and Fragile Democracies," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(3), pages 446-466, September.
    13. Janos Kornai, 2006. "The Great Transformation Of Central Eastern Europe: Success And Disappointment - First Published," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 2(4), pages 11-38.
    14. Zsolt Darvas, 2010. "The Impact of the Crisis on Budget Policy in Central and Eastern Europe," OECD Journal on Budgeting, OECD Publishing, vol. 10(1), pages 1-42.
    15. Georgios Efthyvoulou, 2012. "Political budget cycles in the European Union and the impact of political pressures," Public Choice, Springer, vol. 153(3), pages 295-327, December.
    16. Gérard Roland, 2002. "The Political Economy of Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 29-50, Winter.
    17. Wim Marneffe & Bas Van Aarle & Wouter Van Der Wielen & Lode Vereeck, 2010. "The Impact of Fiscal Rules on Public Finances: Theory and Empirical Evidence for the Euro Area," CESifo Working Paper Series 3303, CESifo.
    18. Schuknecht, Ludger, 2004. "EU fiscal rules: issues and lessons from political economy," Working Paper Series 421, European Central Bank.
    19. Marco Buti & Gabriele Giudice, 2002. "Maastricht’s Fiscal Rules at Ten: An Assessment," Journal of Common Market Studies, Wiley Blackwell, vol. 40(5), pages 823-848, December.
    20. Servaas Deroose & Christine Frayne & Lucio R. Pench, 2011. "Fiscal implications of the crisis and the future of the EU fiscal framework," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 3(2), pages 141-161.
    21. James E. Alt & David Dreyer Lassen, 2006. "Transparency, Political Polarization, and Political Budget Cycles in OECD Countries," American Journal of Political Science, John Wiley & Sons, vol. 50(3), pages 530-550, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ademmer, Esther & Dreher, Ferdinand, 2014. "Institutional constraints to political budget cycles in the enlarged EU," Kiel Working Papers 1964, Kiel Institute for the World Economy (IfW Kiel).
    2. Yuriy Bilan & Wadim Strielkowski, 2016. "Migration in post-transition economies: immigration surplus in Visegrad group countries," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 9(2), pages 182-196.
    3. Esther Ademmer & Ferdinand Dreher, 2016. "Constraining Political Budget Cycles: Media Strength and Fiscal Institutions in the Enlarged EU," Journal of Common Market Studies, Wiley Blackwell, vol. 54(3), pages 508-524, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    2. Ademmer, Esther & Dreher, Ferdinand, 2014. "Institutional constraints to political budget cycles in the enlarged EU," Kiel Working Papers 1964, Kiel Institute for the World Economy (IfW Kiel).
    3. Antoine Cazals & Pierre Mandon, 2015. "Political Budget Cycles: Manipulation of Leaders or Bias from Research? A Meta-Regression Analysis," Working Papers halshs-01238883, HAL.
    4. Eric Dubois, 2016. "Political business cycles 40 years after Nordhaus," Public Choice, Springer, vol. 166(1), pages 235-259, January.
    5. Antoine Cazals & Pierre Mandon, 2016. "Political Budget Cycles: Manipulation from Leaders or Manipulation from Researchers? Evidence from a Meta-Regression Analysis," Working Papers halshs-01320586, HAL.
    6. Antoine CAZALS & Pierre MANDON, 2016. "Political Budget Cycles: Manipulation from Leaders or Manipulation from Researchers? Evidence from a Meta-Regression Analysis," Working Papers 201609, CERDI.
    7. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Post-Print hal-01291401, HAL.
    8. García, Israel & Hayo, Bernd, 2021. "Political budget cycles revisited: Testing the signalling process," European Journal of Political Economy, Elsevier, vol. 69(C).
    9. Velibor Mačkić, 2014. "Političko-proračunski ciklusi na uzorku hrvatskih gradova," EFZG Working Papers Series 1401, Faculty of Economics and Business, University of Zagreb.
    10. George Petrakos & Konstantinos Rontos & Luca Salvati & Chara Vavoura & Ioannis Vavouras, 2022. "Toward a political budget cycle? Unveiling long-term latent paths in Greece," Quality & Quantity: International Journal of Methodology, Springer, vol. 56(5), pages 3379-3394, October.
    11. Stéphane Goutte & David Guerreiro & Bilel Sanhaji & Sophie Saglio & Julien Chevallier, 2019. "International Financial Markets," Post-Print halshs-02183053, HAL.
    12. Troeger, Vera & Schneider, Christina J., 2012. "Strategic Budgeteering and Debt Allocation," CAGE Online Working Paper Series 85, Competitive Advantage in the Global Economy (CAGE).
    13. Aidt, Toke S. & Mooney, Graham, 2014. "Voting suffrage and the political budget cycle: Evidence from the London Metropolitan Boroughs 1902–1937," Journal of Public Economics, Elsevier, vol. 112(C), pages 53-71.
    14. Lee, Dongwon & Min, Sujin, 2021. "Defective democracy and the political budget cycle," Journal of Comparative Economics, Elsevier, vol. 49(4), pages 947-961.
    15. Antoine Cazals & Pierre Mandon, 2015. "Political Budget Cycles: Manipulation of Leaders or Bias from Research? A Meta-Regression Analysis," CERDI Working papers halshs-01238883, HAL.
    16. Foremny, Dirk & Riedel, Nadine, 2014. "Business taxes and the electoral cycle," Journal of Public Economics, Elsevier, vol. 115(C), pages 48-61.
    17. Bostashvili, David & Ujhelyi, Gergely, 2019. "Political budget cycles and the civil service: Evidence from highway spending in US states," Journal of Public Economics, Elsevier, vol. 175(C), pages 17-28.
    18. Baldi, Guido & Forster, Stephan, 2019. "Political Budget Cycles: Evidence from Swiss Cantons," EconStor Preprints 195930, ZBW - Leibniz Information Centre for Economics.
    19. Hansen, Daniel, 2020. "The effectiveness of fiscal institutions: International financial flogging or domestic constraint?," European Journal of Political Economy, Elsevier, vol. 63(C).
    20. Chortareas, Georgios & Logothetis, Vasileios & Papandreou, Andreas A., 2016. "Political budget cycles and reelection prospects in Greece's municipalities," European Journal of Political Economy, Elsevier, vol. 43(C), pages 1-13.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijepee:v:5:y:2012:i:2:p:168-182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=219 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.