Electoral Fiscal Policy in New, Old, and Fragile Democracies

Comparative Economic Studies, Vol. 49, No. 3, 2007

Posted: 28 Apr 2009

See all articles by Adi Brender

Adi Brender

Bank of Israel - Research Department

Allan Drazen

University of Maryland - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: December 2008

Abstract

We review research on political budget cycles across countries, including recent findings that they are a phenemenon of new democracies and are statistically insignificant in old, established democracies. We then consider what may account for this and review several hypotheses. Recent empirical work also finds that voters in new democracies do not reward election-year deficit spending, raising questions about explanations focusing on the use of election-year deficits to gain votes. This suggests that the increase in election-year expenditures and deficits in new democracies may reflect attempts to shore up a fragile democracy.

Keywords: political business cycle, election-year deficit spending, new democracies, electoral fiscal policy

JEL Classification: P500, E000

Suggested Citation

Brender, Adi and Drazen, Allan, Electoral Fiscal Policy in New, Old, and Fragile Democracies (December 2008). Comparative Economic Studies, Vol. 49, No. 3, 2007. Available at SSRN: https://ssrn.com/abstract=1395719

Adi Brender (Contact Author)

Bank of Israel - Research Department ( email )

PO Box 780
Jerusalem 91007
Israel
+972 2 655 2618 (Phone)
+972 2 655 2657 (Fax)

Allan Drazen

University of Maryland - Department of Economics ( email )

College Park, MD 20742-1815
United States
301-405-3477 (Phone)
301-405-7835 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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