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Political budget cycles in Latin America, 1982-2014

Author

Listed:
  • Pablo Mejía Reyes
  • Marlen Rocio Reyes Hernández
  • Paolo Riguzzi

Abstract

This paper aims to detect the presence of political budget cycles (PBuCs) around presidential elections in four large Latin American countries (Argentina, Chile, Colombia, and Mexico) over the 1982-2014 period, in the framework of democratic regimes. Extended autoregressive models are estimated for total public expenditure and their chief components, considering the effect of economic fluctuations. Among the most important findings, weak evidence of PBuCs was found in the case of Argentina and Chile, while in the case of Mexico and Colombia, post-electoral adjustments in budget items sensitive to political manipulation were found, such as subsidies and public works, along with pre-electoral increases in total expenditure in the former one, and in goods and services in the latter.

Suggested Citation

  • Pablo Mejía Reyes & Marlen Rocio Reyes Hernández & Paolo Riguzzi, 2020. "Political budget cycles in Latin America, 1982-2014," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 12(1), pages 235-269, June.
    • Handle: RePEc:col:000443:018478
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    References listed on IDEAS

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    2. Brender, Adi & Drazen, Allan, 2005. "Political budget cycles in new versus established democracies," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1271-1295, October.
    3. Alberto Alesina, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(3), pages 651-678.
    4. Drazen, Allan & Brender, Adi, 2003. "Where Does the Political Budget Cycle Really Come From?," CEPR Discussion Papers 4049, C.E.P.R. Discussion Papers.
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    More about this item

    Keywords

    political budget cycle; public expenditure; Latin America.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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