Do Elections Hurt Developing Economies?

43 Pages Posted: 18 Apr 2008 Last revised: 8 Jan 2009

Stephen B. Kaplan

George Washington University - Department of Political Science; George Washington University - Institute for International Economic Policy (GWIIEP)

Date Written: May 22, 2008

Abstract

Political economists debate the existence of a political business cycle (PBCs), in which politicians stimulate the economy to improve their re-election chances, only to cause a post-election slowdown. For developing countries, scholars have found evidence of election-year policy tinkering. Yet beyond this tinkering, perhaps elections have other important consequences. I test whether elections produce the harmful economic effects predicted by PBC theory. Using quarterly data from 47 democracies from 1993-2004, I do not find any evidence of negative outcomes. Instead, there is an unexpected variance correlated with institutional design. Elections and economic outcomes appear to have no relationship in presidential systems, but a positive and statistically significant relationship in parliamentary systems. I argue that the absence of PBCs reflects the difficulty in triggering booms before elections in open economies.

Keywords: political business cycles, developing countries, elections, political budget cycles, political economy

JEL Classification: E30, E32, E40, E50, E60, E62, E64, F20, O10, O11

Suggested Citation

Kaplan, Stephen B., Do Elections Hurt Developing Economies? (May 22, 2008). Available at SSRN: https://ssrn.com/abstract=1121488 or http://dx.doi.org/10.2139/ssrn.1121488

Stephen B. Kaplan (Contact Author)

George Washington University - Department of Political Science ( email )

Department of Political Science
Monroe Hall 470, 2115 G Street, N.W.
Washington, DC 20052
United States
202-994-6680 (Phone)

George Washington University - Institute for International Economic Policy (GWIIEP) ( email )

1957 E Street, N.W.
Suite 502
Washington, DC 20052
United States

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