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Electoral Rules, Forms of Government, and Political Budget Cycles in Transition Countries

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  • Marko Klašnja

    () (Peterson Institute for International Economics, USA)

Abstract

Recent studies have suggested the existence of election-year economics in fiscal policy in transition countries. This study asks whether such electoral cycles in aggregate measures (overall expenditures, revenues and balance) and spending composition (broad vs. targeted outlays) differ among countries with different political systems. This question is motivated by a sharp division between majoritarianpresidential systems in Central Asia and Eastern Europe, and proportional-parliamentary systems in the Baltics, Central and Southeastern Europe. Further, in the absence of context-sensitive theories, the paper asks whether observed outcomes in the transition process conform to the theoretical priors developed for conditions in stable democracies. Finally, the paper attempts to normatively establish whether either of the alternative combinations yields more optimal policy outcomes. The results suggest that the differences indeed exist, primarily on the revenue side and in the composition of expenditures. These results differ markedly from those for stable democracies, especially in the case of composition of spending. Normatively, presidentialism yields suboptimal outcomes in comparison to parliamentarianism, likely due to inefficient system of constitutionally intended checks and balances..

Suggested Citation

  • Marko Klašnja, 2008. "Electoral Rules, Forms of Government, and Political Budget Cycles in Transition Countries," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 55(2), pages 185-218, June.
  • Handle: RePEc:voj:journl:v:55:y:2008:i:2:p:185-218
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    References listed on IDEAS

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    1. Torsten Persson & Guido Tabellini & Francesco Trebbi, 2003. "Electoral Rules and Corruption," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 958-989, June.
    2. Drazen, Allan & Eslava, Marcela, 2010. "Electoral manipulation via voter-friendly spending: Theory and evidence," Journal of Development Economics, Elsevier, vol. 92(1), pages 39-52, May.
    3. Mark Hallerberg & Lúcio Vinhas de Souza & William Roberts Clark, 2002. "Political Business Cycles in EU Accession Countries," European Union Politics, , vol. 3(2), pages 231-250, June.
    4. Jorge M. Streb & Daniel Lema & Gustavo Torrens, 2009. "Checks and Balances on Political Budget Cycles: Cross-Country Evidence," Kyklos, Wiley Blackwell, vol. 62(3), pages 426-447, August.
    5. James E. Alt & David Dreyer Lassen, 2005. "The Political Budget Cycle is Where You Can't See It: Transparency and Fiscal Manipulation," EPRU Working Paper Series 05-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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    More about this item

    Keywords

    Political budget cycles; Transition countries; Electoral rules; Forms of government; Checks and balances;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • 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
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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