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POLITICAL OPPORTUNISM AND COUNTERCYCLICAL FISCAL POLICY IN ELECTION‐YEAR RECESSIONS.
- Source :
- Economic Inquiry; Oct2019, Vol. 57 Issue 4, p2058-2081, 24p, 1 Diagram, 10 Charts
- Publication Year :
- 2019
-
Abstract
- Political budget cycles (PBCs) have been well documented in the literature, albeit not for all circumstances. Similarly, there is clear evidence on the positive effect of economic growth on electoral success. However, no work has been done on the impact of economic growth on the magnitude of PBCs. The theoretical model argues that a government has an incentive to increase fiscal manipulations when a recession is expected to hit and curtail reelection chances; this amounts to countercyclical policy for opportunistic rather than Keynesian motives. Very robust evidence for this behavior is found in Portuguese municipalities; in election years, budget deficits go up even more and significantly so, when a recession is expected. [ABSTRACT FROM AUTHOR]
- Subjects :
- FISCAL policy
RECESSIONS
ECONOMIC development
BUSINESS cycles
Subjects
Details
- Language :
- English
- ISSN :
- 00952583
- Volume :
- 57
- Issue :
- 4
- Database :
- Complementary Index
- Journal :
- Economic Inquiry
- Publication Type :
- Academic Journal
- Accession number :
- 138089072
- Full Text :
- https://doi.org/10.1111/ecin.12813