Fiscal Governance and Electoral Accountability: Evidence from Late Budgets
33 Pages Posted: 19 Jul 2010 Last revised: 30 Aug 2010
Date Written: 2010
Are politicians held accountable for bad governance? Using a unique panel data set on late budgets in US state governments, we investigate whether voters react to bad fiscal governance by penalizing political actors involved in the budgetary process at election day. We find that legislatures face significant negative electoral consequences of not finishing a budget on time, while governors are penalized only under unified governments. In general, electoral penalties are larger where clarity of responsibility, affected by divided government, supermajority requirements and seat share margins, is higher, consistent with models of retrospective voting.
Keywords: retrospective voting, electoral accountability, budgeting, fiscal stalemate, fiscal governance, good governance
JEL Classification: D72, H11, H72, H83
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