Party alignment, political budget cycles and vote within a federal country
We first study theoretically how intergovernmental relations affect political budget cycles (PBCs) within federal countries, introducing a national incumbent that favors aligned districts in a model where discretionary fiscal policy is subject to credibility problems. Then we analyze Argentina’s provinces during the 1985–2001 period. Unsurprisingly, aligned provinces where the governor belongs to the president’s party receive larger federal transfers (and have larger public expenditures) during the governor’s entire term, while provincial budget balances worsen in electoral years. We uncover an interaction effect by which unaligned provinces tend to worsen their budget balances more in electoral years. The sharpest result is that larger average federal transfers boost the vote for aligned governors. Two broad implications are that studies of subnational PBCs are biased by an omitted factor (discretional federal transfers), and governors unaffiliated with the president suffer a “Cinderella” effect at the polls which helps the president dominate national politics.
|Date of creation:||Oct 2016|
|Date of revision:||May 2017|
|Contact details of provider:|| Postal: Av. Córdoba 374, (C1054AAP) Capital Federal|
Phone: (5411) 6314-3000
Fax: (5411) 4314-1654
Web page: http://www.cema.edu.ar/publicaciones/doc_trabajo.html
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Khemani, Stuti, 2007. "Does delegation of fiscal policy to an independent agency make a difference? Evidence from intergovernmental transfers in India," Journal of Development Economics, Elsevier, vol. 82(2), pages 464-484, March.
- Valentino Larcinese & Leonzio Rizzo & Cecilia Testa, 2005.
"Allocating the US Federal Budget to the States: the Impact of the President,"
STICERD - Political Economy and Public Policy Paper Series
03, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Valentino Larcinese & Leonzio Rizzo & Cecilia Testa, 2005. "Allocating the US federal budget to the states: the impact of the President," LSE Research Online Documents on Economics 3611, London School of Economics and Political Science, LSE Library.
- Bugarin, Mauricio Soares & Ferreira, Ivan Fecury, 2007. "Transferências Voluntárias e Ciclo Político-Orçamentário no Federalismo Fiscal Brasileiro," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 61(3), March.
- Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
- Robert J. Barro & David B. Gordon, 1981. "A Positive Theory of Monetary Policy in a Natural-Rate Model," NBER Working Papers 0807, National Bureau of Economic Research, Inc.
- Shanna Rose, 2006. "Do fiscal rules dampen the political business cycle?," Public Choice, Springer, vol. 128(3), pages 407-431, September.
- Daniel Lema, 2008. "Conditional political budget cycles in Argentine provinces," CEMA Working Papers: Serie Documentos de Trabajo. 389, Universidad del CEMA.
- 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, 08.
- Jorge Streb & Daniel Lema & Gustavo Torrens, 2005. "Discretional political budget cycles and separation of powers," CEMA Working Papers: Serie Documentos de Trabajo. 286, Universidad del CEMA.
- Jakob Haan & Jeroen Klomp, 2013. "Conditional political budget cycles: a review of recent evidence," Public Choice, Springer, vol. 157(3), pages 387-410, December.
- Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2009. "Electoral goals and center-state transfers: A theoretical model and empirical evidence from India," Journal of Development Economics, Elsevier, vol. 88(1), pages 103-119, January.
- Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2008. "Electoral Goals and Center-State Transfers: A Theoretical Model and Empirical Evidence from India," IZA Discussion Papers 3376, Institute for the Study of Labor (IZA).
- Wiji Arulampalam & Sugato Dasgupta & Amrita Dhillon & Bhaskar Dutta, 2008. "Electoral goals and center-state transfers: A Theoretical model and empirical evidence from India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-14, Indian Statistical Institute, New Delhi, India.
- Shi, Min & Svensson, Jakob, 2006. "Political budget cycles: Do they differ across countries and why?," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1367-1389, September.
- Osvaldo Meloni, 2016. "Electoral opportunism and vertical fiscal imbalance," Journal of Applied Economics, Universidad del CEMA, vol. 19, pages 145-168, May.
- Cecilia Rumi, 2014. "National electoral cycles in transfers to subnational jurisdictions. Evidence from Argentina," Journal of Applied Economics, Universidad del CEMA, vol. 17, pages 161-178, May.
- Susanne Lohmann, 1998. "Rationalizing the Political Business Cycle: A Workhorse Model," Economics and Politics, Wiley Blackwell, vol. 10(1), pages 1-17, 03.
- Kenneth Rogoff & Anne Sibert, 1988. "Elections and Macroeconomic Policy Cycles," Review of Economic Studies, Oxford University Press, vol. 55(1), pages 1-16.
- Kenneth Rogoff & Anne Sibert, 1986. "Elections and Macroeconomic Policy Cycles," NBER Working Papers 1838, National Bureau of Economic Research, Inc.
- Linda Veiga & Maria Pinho, 2007. "The political economy of intergovernmental grants: Evidence from a maturing democracy," Public Choice, Springer, vol. 133(3), pages 457-477, December.
- Jorge Streb & Gustavo Torrens, 2013. "Making rules credible: divided government and political budget cycles," Public Choice, Springer, vol. 156(3), pages 703-722, September.
- Jorge M. Streb & Gustavo F. Torrens, 2009. "Making rules credible: Divided government and political budget cycles," CEMA Working Papers: Serie Documentos de Trabajo. 395, Universidad del CEMA.
- William D. Nordhaus, 1975. "The Political Business Cycle," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 169-190.
- Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
- Kenneth Rogoff, 1987. "Equilibrium Political Budget Cycles," NBER Working Papers 2428, National Bureau of Economic Research, Inc.
- Galli, Emma & Rossi, Stefania P S, 2002. "Political Budget Cycles: The Case of the Western German Lander," Public Choice, Springer, vol. 110(3-4), pages 283-303, March.
- Mark P. Jones & Osvaldo Meloni & Mariano Tommasi, 2012. "Voters as Fiscal Liberals: Incentives and Accountability in Federal Systems," Economics and Politics, Wiley Blackwell, vol. 24(2), pages 135-156, 07. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:cem:doctra:601. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Valeria Dowding)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.