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Political budget cycles and media freedom

Author

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  • Francisco Jose Veiga
  • Linda Goncalves Veiga
  • Atsuyoshi Morozumi

Abstract

This paper examines the effects of elections on the conduct of central governments’ fiscal policies. To do so, it uses a unique panel database that includes disaggregated spending and revenue series at the central government level for multiple countries over the 1975-2010 period. After examining political environments under which incumbent governments generate political budget cycles (PBCs), we compare the relative importance of factors influencing cycles. Media freedom is identified as the factor that plays the most critical role. Specifically, we find robust evidence that the electoral effect on budget deficits under low media freedom is significantly larger than under high freedom, even when other determinants of PBCs are controlled for. We then show that what drives the election-year rise in budget deficits under low media freedom is an increase in the current, not capital, component of public expenditure.

Suggested Citation

  • Francisco Jose Veiga & Linda Goncalves Veiga & Atsuyoshi Morozumi, 2015. "Political budget cycles and media freedom," Discussion Papers 2015/14, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    • Handle: RePEc:not:notcfc:15/14
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    File URL: https://www.nottingham.ac.uk/cfcm/documents/papers/cfcm-2015-14.pdf
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    References listed on IDEAS

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    Cited by:

    1. Potrafke, Niklas, 2020. "General or central government? Empirical evidence on political cycles in budget composition using new data for OECD countries," European Journal of Political Economy, Elsevier, vol. 63(C).
    2. Bram Gootjes & Jakob Haan & Richard Jong-A-Pin, 2021. "Do fiscal rules constrain political budget cycles?," Public Choice, Springer, vol. 188(1), pages 1-30, July.
    3. Milan Bednař, 2019. "Political Budget Cycles in the European Union: New Evidence of Fragmentation," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(4), pages 523-547, December.
    4. Agnello, Luca & Castro, Vítor & Sousa, Ricardo M., 2019. "A competing risks tale on successful and unsuccessful fiscal consolidations," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 63(C).
    5. Cipullo, Davide & Reslow, André, 2022. "Electoral cycles in macroeconomic forecasts," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 307-340.
    6. Lenka Maličká, 2019. "Political Expenditure Cycle at the Municipal Government Level in Slovakia," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(2), pages 503-513.
    7. García, Israel & Hayo, Bernd, 2021. "Political budget cycles revisited: Testing the signalling process," European Journal of Political Economy, Elsevier, vol. 69(C).
    8. Frank Bohn & Francisco José Veiga, 2019. "Elections, recession expectations and excessive debt: an unholy trinity," Public Choice, Springer, vol. 180(3), pages 429-449, September.
    9. Linda G. Veiga & Georgios Efthyvoulou & Atsuyoshi Morozumi, 2018. "Political Budget Cycles: Conditioning Factors and New Evidence," NIPE Working Papers 21/2018, NIPE - Universidade do Minho.
    10. Kyriacou, Andreas P. & Okabe, Tomohito & 岡部, 智人 & Roca-Sagalés, Oriol, 2020. "Conditional Political Budget Cycles: A Reconsideration of the Role of Economic Development," Discussion Paper Series 709, Institute of Economic Research, Hitotsubashi University.
    11. Frank Bohn & Jan-Egbert Sturm, 2021. "Do expected downturns kill political budget cycles?," The Review of International Organizations, Springer, vol. 16(4), pages 817-841, October.
    12. Acuff, Christopher, 2021. "An Empirical Examination of Representational Equity in Consolidated Governments, 1965-2002," SocArXiv bupfs, Center for Open Science.

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    Keywords

    Political budget cycles; Central government; Voter information; Media Freedom; Fiscal policy composition;
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