Electoral Misgovernance Cycles: Evidence from Wildfires and Tax Evasion in Greece and Elsewhere
38 Pages Posted: 16 Nov 2010
Date Written: November 14, 2010
We present detailed empirical evidence that around Greek elections, misgovernance results in significant increases in wildfires and tax evasion and with important economic implications: the cumulative cost of these effects in recent years has been over 8% of GDP and has therefore been a contributing factor to Greece’s debt crisis and any effect this has had on the global economy. We interpret this evidence as a type of misgovernance which arises from electoral cycles in two types of incumbent incentives: (i) to allocate effort or attention between governing vs. campaigning; and/or (ii) to adopt even very inefficient redistributive policies if they benefit special interests with a lead over when the costs are observed. While these incentives may manifest differently among countries, our analysis suggests that electoral cycles everywhere may be much more multifaceted and harmful than previous literature suggests.
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