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Electoral Cycles in Public Expenditures: Evidence from Czech Local Governments

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  • Lenka Stastna

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)

Abstract

This paper analyzes local political cycle in Czech municipalities over the period between 1997 and 2013. We apply the system GMM and the difference GMM estimators to identify distortion in current and capital expenditures per capita in electoral and pre-electoral years, while focusing on various spending groups (infrastructure, leisure, housing, education, etc.). We also test specific effects of local governments' characteristics (partisanship, strength, experience). In general, municipalities increase capital spending (primarily on infrastructure, housing, leisure activities) and decrease current spending (administration) before elections. Rightist governments target leisure activities and save more on administration, whereas leftist governments target current spending on social services. Stronger governments and those with newly elected mayors have lower incentive to create an electoral cycle. Voters' involvement in local policies and also success of ruling local (and parliamentary) parties in nat ional parliamentary elections diminish local electoral cycles.

Suggested Citation

  • Lenka Stastna, 2015. "Electoral Cycles in Public Expenditures: Evidence from Czech Local Governments," Working Papers IES 2015/28, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Dec 2015.
    • Handle: RePEc:fau:wpaper:wp2015_28
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    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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