1. The Non-Democratic Politics of Fiscal Policy Cycles: Theory and Evidence from Malaysia and Mexico.
- Author
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Pepinsky, Thomas
- Subjects
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ELECTIONS , *ECONOMIC policy , *DEMOCRACY , *POLITICAL parties - Abstract
Electoral institutions in democratic states produce incentives for politicians to manipulate economic policy for electoral gain. A growing literature on political institutions in non-democratic states has begun to focus on the effects of these institutions on political and economic systems. Recently, Gandhi and Przeworski (2001) have argued that democratic institutions function by giving support to the autocratic regimes in which they are embedded. If non-democratic institutions are functional, the natural question is whether or not they are consequential. Do democratic institutions have political and economic consequences in non-democratic states that are analogous to those of democratic institutions in democratic states? I argue that the answer to this question is yes, and build on the literature on political business cycles (PBCs) to explain how. Elections in non-democratic regimes bestow legitimacy on the ruling government by purportedly demonstrating its widespread popular support. Ruling parties in non-democratic regimes are interested in maximizing their perceived legitimacy among the population, as such legitimacy gives them free reign to pursue their policy objectives with a minimal amount of domestic opposition. Whereas some authoritarian regimes with a tight control over the press and the exchange of information can create the illusion of a wide popular mandate, other non-democratic regimes must resort to more subtle political means to garner high levels of popular support. I focus on the latter group, which Levitsky and Way (2002:53) refer to as “competitive authoritarian regimes,” where conditions are ideal for the manipulation of economic policy for electoral gain. With the significant informational asymmetry regarding macroeconomic policy in the government’s favor, I predict that non-democratic regimes manipulate fiscal policy to create popular support for the incumbent regime. I demonstrate the applicability of this reasoning with a study of fiscal decision-making accompanying the 1982 presidential elections in Mexico. Turning to a longitudinal study, I develop a more rigorous test of the hypothesis through a time-series analyses of the political and economic correlates of national account balances in Malaysia. Employing an autoregressive conditional heteroskedasticity model and adjusting for seasonal effects, I find a robust association between elections and lower quarterly budgetary surpluses from the years 1967 to 1997. At least in Malaysia, non-democratic regimes are characterized not simply by an unresponsive government, but rather by a dynamic political process. This paper contributes to comparative politics in two ways. By focusing on some of the more observable implications of economic policy manipulation in a well-defined population of states, this model lends itself to empirical verification, often difficult in the study of non-democratic states. My study also demonstrates ways in which researchers might conceive of the relationship between authoritarian regimes and the populations that they govern, illuminating directions in which the study of non-democratic governance might proceed in the future. References Gandhi, Jennifer, and Adam Przeworski. 2001. “Dictatorial Institutions and the Survival of Dictators.” Paper presented at the 2001 Annual Meeting of the American Political Science Association, San Francisco. Levitsky, Steven, and Lucan A. Way. 2002. “The Rise of Competitive Authoritarianism.” Journal of Democracy 13(2). pp. 51-65. [ABSTRACT FROM AUTHOR]
- Published
- 2004
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