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Do political budget cycles differ in Latin American democracies?

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  • Lorena Barberia

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  • George Avelino

    ()

Abstract

We test for political budget cycles in a panel of eighteen Latin American democracies from 1973 to 2008. Recent studies have argued that the pattern of deficit cycles in a large cross-section of countries is driven by the experience of ``new democracies. As a large share of the countries that underwent democratization during this period are in Latin America, we seek to verify if these patterns are robust using an updated data set on fiscal expenditures, democratization and elections. Our results confirm that elections provoke increases in the fiscal deficit for Latin American democracies, but that this pattern is not contingent on a country being in the early phase of its democratic transition. We argue that these findings suggest that greater attention should be directed at the selection criteria utilized to define democracy and competitive elections when testing for political budget cycles. "

Suggested Citation

  • Lorena Barberia & George Avelino, 2011. "Do political budget cycles differ in Latin American democracies?," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Spring 20), pages 101-146, January.
  • Handle: RePEc:col:000425:008448
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    Cited by:

    1. repec:hal:journl:hal-01291401 is not listed on IDEAS
    2. Stephen Kaplan, 2016. "Fighting Past Economic Wars: Crisis and Austerity in Latin America," Working Papers 2015-13, The George Washington University, Institute for International Economic Policy.
    3. Eric Dubois, 2016. "Political business cycles 40 years after Nordhaus," Public Choice, Springer, vol. 166(1), pages 235-259, January.
    4. Fabio Alvim Klein & Sergio Naruhiko Sakurai, 2016. "Term Limits And Political Budget Cycles At The Local Level: Evidence From A Young Democracy," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 052, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. Hoda Youssef, 2012. "Fiscal Manipulation in Non-democratic Regimes: The Case of Egypt," Working Papers 703, Economic Research Forum, revised 2012.
    6. Antoine Cazals & Pierre Mandon, 2016. "Political Budget Cycles: Manipulation from Leaders or Manipulation from Researchers? Evidence from a Meta-Regression Analysis," Working Papers halshs-01320586, HAL.
    7. Jakob Haan & Jeroen Klomp, 2013. "Conditional political budget cycles: a review of recent evidence," Public Choice, Springer, vol. 157(3), pages 387-410, December.
    8. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    9. Andrew Q. Philips, 2016. "Seeing the forest through the trees: a meta-analysis of political budget cycles," Public Choice, Springer, vol. 168(3), pages 313-341, September.
    10. Stephen B. Kaplan, 2014. "The Political Economy of Sovereign Debt: Global Finance and Electoral Cycles," Working Papers 2015-1, The George Washington University, Institute for International Economic Policy.
    11. Stephen B. Kaplan & Kaj Thomsson, 2014. "The Political Economy of Sovereign Borrowing: Explaining the Policy Choices of Highly Indebted Governments," Working Papers 2014-10, The George Washington University, Institute for International Economic Policy.
    12. Jorge M. Streb & Daniel Lema & Pablo Garofalo, 2012. "Temporal aggregation in political budget cycles," ECONOMIA JOURNAL, THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION - LACEA, vol. 0(Fall 2012), pages 39-78, August.
    13. 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.
    14. Fabio Alvim Klein, 2014. "Do Opportunistic And Partisan Fiscalcycles Come Together?," Anais do XL Encontro Nacional de Economia [Proceedings of the 40th Brazilian Economics Meeting] 060, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    15. Laopodis, Nikiforos T. & Merika, Anna A. & Triantafillou, Annie, 2016. "Unraveling the political budget cycle nexus in Greece," Research in International Business and Finance, Elsevier, vol. 36(C), pages 13-27.
    16. Antoine Cazals & Pierre Mandon, 2015. "Political Budget Cycles: Manipulation of Leaders or Bias from Research? A Meta-Regression Analysis," Working Papers halshs-01238883, HAL.
    17. Antoine CAZALS & Pierre MANDON, 2016. "Political Budget Cycles: Manipulation from Leaders or Manipulation from Researchers? Evidence from a Meta-Regression Analysis," Working Papers 201609, CERDI.
    18. Stephen B. Kaplan, 2014. "Political Economy of Macroeconomic Policymaking: Economic Crises and Technocratic Governance," Working Papers 2014-18, The George Washington University, Institute for International Economic Policy.

    More about this item

    Keywords

    Political budget cycles; Elections; Fiscal adjustments; Latin America;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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