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Do Political Factors Affect Fiscal Consolidation? Evidence From Spanish Regional Governments

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  • Alberto Vaquero-García
  • María Cadaval-Sampedro
  • Santiago Lago-Peñas

Abstract

This paper empirically examines the political factors behind the different fiscal consolidation paths across Spanish regions over the period 2004 to 2017. Spanish regions provide an interesting case study due to both the strong fiscal decentralization and the deep impact of the so-called “Great Recession†on subcentral budget constraints in Spain. The estimates confirm that governments react to fiscal imbalances by reducing expenditure growth, but this reaction depends on the electoral budget cycle and the results of elections. Fiscal consolidation tends to stop in election years and is boosted by changes in the incumbent. By contrast, neither ideology nor fragmentation of government systematically affects the dynamics of fiscal adjustment.

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  • Alberto Vaquero-García & María Cadaval-Sampedro & Santiago Lago-Peñas, 2022. "Do Political Factors Affect Fiscal Consolidation? Evidence From Spanish Regional Governments," SAGE Open, , vol. 12(1), pages 21582440221, March.
    • Handle: RePEc:sae:sagope:v:12:y:2022:i:1:p:21582440221085002
    DOI: 10.1177/21582440221085002
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    2. Carmen Marín-González & Diego Martínez-López, 2024. "Fiscal stabilisation, debt sustainability and public spending in subnational governments. The case of the Spanish regions," Studies on the Spanish Economy eee2024-02, FEDEA.

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