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Seeking votes - the political economy of expenditures by the Peruvian Social Fund (FONCODES), 1991-95

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  • Schady, Norbert R.

Abstract

President Alberto Fujimori created the Peruvian social Fund (FONCODES) in 1991 with the stated objectives of generating employment, helping to alleviate poverty, and improving access to social services. The author uses province-level data on monthly expenditures, socio-economic indicators, and electoral outcomes to analyze political influences on the timing and geographic distribution of FONCODES expenditures between 1991 and 1995. He finds that: 1) FONCODES expenditures increased significantly before elections. 2) FONCODES projects were directed at poor provinces, as well as provinces in which the marginal political impact of expenditures was likely to be greatest. The results are robust to many specifications and controls. The Peruvian data thus support predictions made in the literature on political business cycle as well the literature on political influences on the allocation of discretionary funds.

Suggested Citation

  • Schady, Norbert R., 1999. "Seeking votes - the political economy of expenditures by the Peruvian Social Fund (FONCODES), 1991-95," Policy Research Working Paper Series 2166, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2166
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    References listed on IDEAS

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    1. Rudiger Dornbusch & Sebastian Edwards, 1989. "Macroeconomic Populism in Latin America," NBER Working Papers 2986, National Bureau of Economic Research, Inc.
    2. Peltzman, Sam, 1990. "How Efficient Is the Voting Market?," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 27-63, April.
    3. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
    4. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism," NBER Chapters,in: The Macroeconomics of Populism in Latin America, pages 7-13 National Bureau of Economic Research, Inc.
    5. Schuknecht, Ludger, 1996. "Political Business Cycles and Fiscal Policies in Developing Countries," Kyklos, Wiley Blackwell, vol. 49(2), pages 155-170.
    6. repec:pri:rpdevs:case_election_goals_paper is not listed on IDEAS
    7. Dixit, Avinash K & Londregan, John, 1994. "The Determinants of Success of Special Interests in Redistributive Politics," CEPR Discussion Papers 1054, C.E.P.R. Discussion Papers.
    8. Case, Anne, 2001. "Election goals and income redistribution: Recent evidence from Albania," European Economic Review, Elsevier, vol. 45(3), pages 405-423, March.
    9. Stuart Landon & David L. Ryan, 1997. "The Political Costs of Taxes and Government Spending," Canadian Journal of Economics, Canadian Economics Association, vol. 30(1), pages 85-111, February.
    10. repec:pri:rpdevs:case_election_goals_paper.pdf is not listed on IDEAS
    11. Deacon, Robert T & Shapiro, Perry, 1975. "Private Preference for Collective Goods Revealed Through Voting on Referenda," American Economic Review, American Economic Association, vol. 65(5), pages 943-955, December.
    12. Hardle, Wolfgang & Linton, Oliver, 1986. "Applied nonparametric methods," Handbook of Econometrics,in: R. F. Engle & D. McFadden (ed.), Handbook of Econometrics, edition 1, volume 4, chapter 38, pages 2295-2339 Elsevier.
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    Citations

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    Cited by:

    1. Pierre Andre & Sandrine Mesplé-Somps, 2010. "Politics and the geographic allocation of public funds in a semi-democracy. The case of Ghana, 1996 - 2004," PSE - G-MOND WORKING PAPERS halshs-00962698, HAL.
    2. Sam Hickey, 2007. "Conceptualising the Politics of Social Protection in Africa," Global Development Institute Working Paper Series 0407, GDI, The University of Manchester.
    3. Nicola Persico & José C. R. Pueblita & Dan Silverman, 2011. "Factions and Political Competition," Journal of Political Economy, University of Chicago Press, vol. 119(2), pages 242-288.

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