Political Business Cycles and Construction Licensing

30 Pages Posted: 5 Jun 2018

See all articles by Drini Imami

Drini Imami

Agriculture University of Tirana

Luca Jacopo Uberti

University of Oslo

Endrit Lami

Budapest University of Technology and Economics

Edvin Zhllima

Agriculture University of Tirana

Date Written: July 2018

Abstract

We analyze the effects of opportunistic and partisan politics on the licensing of construction activities, which in turn determines the level of housing supply. In line with Political Business Cycle theory, we hypothesize that the municipal incumbent may manipulate the supply of construction permits before (general and local) elections in order to boost economic activity and voter satisfaction, or to accommodate special‐interest groups. Our findings, based on time‐series data from post‐socialist Tirana (Albania), are consistent with opportunistic and partisan incentives’ creating cycle effects in the licensing of construction permits. However, we find that the direction of opportunistic election cycles depends critically on the interaction between the municipal incumbent and the central‐level government. Our paper raises important questions about the effects of transition politics on spatial development in post‐socialist cities.

Keywords: housing supply, construction licensing, political business cycles, corruption, transition, zero‐inflated models

Suggested Citation

Imami, Drini and Uberti, Luca Jacopo and Lami, Endrit and Zhllima, Edvin, Political Business Cycles and Construction Licensing (July 2018). Economics of Transition, Vol. 26, Issue 3, pp. 523-552, 2018. Available at SSRN: https://ssrn.com/abstract=3190747 or http://dx.doi.org/10.1111/ecot.12151

Drini Imami (Contact Author)

Agriculture University of Tirana ( email )

Albania

Luca Jacopo Uberti

University of Oslo ( email )

PO Box 6706 St Olavs plass
Oslo, N-0317
Norway

Endrit Lami

Budapest University of Technology and Economics ( email )

Budafoki ut 8.
Budapest, 1111
Hungary

Edvin Zhllima

Agriculture University of Tirana ( email )

Albania

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