This paper tests the theory of opportunistic cycles in a decade-old democracy, Russia, finds strong evidence of cycles, and provides explanation for why previous literature often found weaker evidence. Using the comprehensive list of Russia's regional elections and regional monthly panel data between 1996 and 2003, we find that: (1) budget cycle is very sizable and short-lived: large expansion and contraction in fiscal spending occur within two months of elections on both sides; (2) the magnitude of the cycle decreases with government transparency, level of regional democracy, and voter awareness; (3) cycle becomes smaller over time; (4) pre-electoral manipulation increases incumbents’ chances for re-election. The results confirm theoretical findings that maturity of democracy, transparency, and voter awareness are important in determining the scope for opportunistic cycles. The short length of the cycle explains underestimation of its size by previous literature because of low frequency data used.
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Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number
w0024.
Length: 38 pages Date of creation: Oct 2003 Date of revision: Handle: RePEc:cfr:cefirw:w0024
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Find related papers by JEL classification: H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures P35 - Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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Michael Bordo & Barry Eichengreen & Daniela Klingebiel & Maria Soledad Martinez-Peria, 2001.
"Is the crisis problem growing more severe?,"
Economic Policy,
CEPR, CES, MSH, vol. 16(32), pages 51-82, 04.
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