Do political budget cycles differ in Latin American democracies?
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. "
Volume (Year): (2011)
Issue (Month): ()
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