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Political Budget Cycles in Papua New Guinea

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  • Ebrima Faal

Abstract

This paper assesses the presence of opportunistic electoral budget cycles in Papua New Guinea. Using quarterly time series data, a clear pattern emerges of pre-election manipulations of fiscal policy by incumbent governments, mainly in the form of increased development spending and overall primary expenditure, followed in some cases by retrenchment in post-election periods. These findings are consistent with the predictions of rational opportunistic political business cycle theory. It is noteworthy that revenue was not statistically significantly related to elections, either in the pre- or post-election period. In this regard, electoral swings in fiscal deficits reflect a preference for influencing expenditures rather than taxation.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/219.

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Length: 16
Date of creation: 01 Sep 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/219

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Keywords: Government expenditures; Budget deficits; elections; election; expenditure; voters; fiscal policy; political parties; total expenditure; recurrent expenditure; expenditures; democratic institutions; government expenditure; voter; electoral systems; recurrent expenditures; political science; total expenditures; capital expenditure; expenditure items; public spending; democratic traditions; distribution of expenditures;

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  1. Nordhaus, William D, 1975. "The Political Business Cycle," Review of Economic Studies, Wiley Blackwell, vol. 42(2), pages 169-90, April.
  2. Khemani, Stuti, 2004. "Political cycles in a developing economy: effect of elections in the Indian States," Journal of Development Economics, Elsevier, vol. 73(1), pages 125-154, February.
  3. Torsten Persson & Gerard Roland & Guido Tabellini, 2004. "How Do Electoral Rules Shape Party Structures, Government Coalitions, and Economic Policies?," CESifo Working Paper Series 1115, CESifo Group Munich.
  4. Kenneth Rogoff & Anne Sibert, 1986. "Elections and Macroeconomic Policy Cycles," NBER Working Papers 1838, National Bureau of Economic Research, Inc.
  5. Gonzalez, Maria de los Angeles, 2002. "Do Changes in Democracy Affect the Political Budget Cycle? Evidence from Mexico," Review of Development Economics, Wiley Blackwell, vol. 6(2), pages 204-24, June.
  6. Block, Steven A., 2002. "Political business cycles, democratization, and economic reform: the case of Africa," Journal of Development Economics, Elsevier, vol. 67(1), pages 205-228, February.
  7. Frey, Bruno S & Schneider, Friedrich, 1978. "A Politico-Economic Model of the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(350), pages 243-53, June.
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Cited by:
  1. Lopez Uribe, Maria del Pilar, 2013. "Roads or Schools? Political Budget Cycles with different types of voters," MPRA Paper 50529, University Library of Munich, Germany.

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