Discretional Political Budget Cycles and Separation of Powers

Universidad del CEMA Working Paper No. 286

33 Pages Posted: 4 Sep 2007

See all articles by Jorge M. Streb

Jorge M. Streb

Universidad del CEMA

Daniel Lema

Universidad del CEMA

Gustavo Torrens

Indiana university

Date Written: February 2005


In contrast to previous empirical work on electoral cycles, which implicitly assumes the executive has full discretion over fiscal policy, this paper contends that under separation of powers an unaligned legislature may have a moderating role. Focusing on the budget surplus, we find that stronger effective checks and balances explain why cycles are weaker in developed and established democracies. Once the discretional component of executive power is isolated, there are significant cycles in all democracies. Whether the political system is presidential or parliamentary, or the electoral rules are majoritarian or proportional, does not change the basic results.

Keywords: political budget cycles, asymmetric information, discretion, separation of powers, checks and balances, veto players, rule of law

JEL Classification: D72, D78

Suggested Citation

Streb, Jorge Miguel and Lema, Daniel and Torrens, Gustavo, Discretional Political Budget Cycles and Separation of Powers (February 2005). Universidad del CEMA Working Paper No. 286, Available at SSRN: https://ssrn.com/abstract=1009275 or http://dx.doi.org/10.2139/ssrn.1009275

Jorge Miguel Streb (Contact Author)

Universidad del CEMA ( email )

Av. Cordoba 374
Buenos Aires, CABA

HOME PAGE: http://www.ucema.edu.ar/u/jms/

Daniel Lema

Universidad del CEMA ( email )

1054 Buenos Aires

Gustavo Torrens

Indiana university ( email )

Wylie Hall, 100 S Woodland Ave
Bloomington, IN 47405-7104
United States
8128568131 (Phone)
47405-7104 (Fax)

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