Public Investment and Re-election Prospects in Developed Countries
AbstractA growing body of literature suggests that office-motivated politicians manipulate fiscal policy instruments in order to seek their re-election. This paper directly examines the impact of the electoral manipulation of the level and composition of fiscal policy on incumbents’ re-election prospects. This impact is estimated through a panel of 21 OECD countries over the period of 1972-1999. Our results suggest that increased public investment during the term in office as well as a shift in expenditures toward public investment can improve re-election prospects. To the contrary, results seem to verify the assumption of low visibility of capital spending, since election year manipulation via public investment does not affect re-election prospects. We also find that voters disfavour politicians who create deficits during elections, while deficit creation over the term in office and preceding the election year (when it is financed by equal proportions of public investment and consumption expenditures) does not seem to affect re-election prospects.
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Bibliographic InfoPaper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2013004.
Length: 26 pages
Date of creation: 2013
Date of revision:
political budget cycles; elections; quality of public expenditure; public investment;
Other versions of this item:
- Margarita Katsimi & Vassilis Sarantides, 2011. "Public Investment and Re-election Prospects in Developed Countries," CESifo Working Paper Series 3570, CESifo Group Munich.
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-PBE-2013-02-03 (Public Economics)
- NEP-POL-2013-02-03 (Positive Political Economics)
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