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Political budget cycles, incumbency advantage, and propaganda

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  • Frank Bohn

Abstract

This paper combines incumbency advantage and political budget cycle theory. An opportunistic politician is given two instruments: deficit‐financed transfers and propaganda. Unlike earlier analytical models, but in accordance with the empirical literature, government manipulations do actually improve re‐election chances. However, the optimal level of government manipulation depends on country characteristics, in particular the competence dispersion among potential candidates. This may explain why it is easier to detect political budget cycles in, for instance, developing countries or new democracies. Results are robust to alternative competence distribution and propaganda cost assumptions.

Suggested Citation

  • Frank Bohn, 2019. "Political budget cycles, incumbency advantage, and propaganda," Economics and Politics, Wiley Blackwell, vol. 31(1), pages 43-70, March.
  • Handle: RePEc:bla:ecopol:v:31:y:2019:i:1:p:43-70
    DOI: 10.1111/ecpo.12122
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    File URL: https://doi.org/10.1111/ecpo.12122
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    Cited by:

    1. Frank Bohn & Francisco José Veiga, 2019. "Political Budget Forecast Cycles," NIPE Working Papers 12/2019, NIPE - Universidade do Minho.
    2. Israel Garcia & Bernd Hayo, 2020. "Political Budget Cycles Revisited: Testing the Signalling Process," MAGKS Papers on Economics 202014, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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