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Do Electoral Cycles Differ Across Political Systems?

IGIER Working Paper No. 232

24 Pages Posted: 19 May 2003  

Guido Tabellini

University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER); Centre for Economic Policy Research (CEPR); Center for Economic Studies and Ifo Institute for Economic Research (CESifo); Bocconi University - Department of Economics

Torsten Persson

Stockholm University - Institute for International Economic Studies (IIES); London School of Economics & Political Science (LSE); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: March 2003

Abstract

Do fiscal policy variables - overall spending, revenue, deficits and welfare-state spending - display systematic patterns in the vicinity of elections? And do such electoral cycles differ among political systems? We investigate these questions in a data set encompassing sixty democracies from 1960-98. Without conditioning on the political system, we find that taxes are cut before elections, painful fiscal adjustments are postponed until after the elections, while welfare-state spending displays no electoral cycle. Our subsequent results show that the pre-election tax cuts is a universal phenomenon. The post-election fiscal adjustments (spending cuts, tax hikes and rises in surplus) are, however, only present in presidential democracies. Moreover, majoritarian electoral rules alone are associated with pre-electoral spending cuts, while proportional electoral rules are associated with expansions of welfare spending both before and after elections.

Keywords: Elections, constitution, form of government, electoral rules, fiscal policy

JEL Classification: A10, H10

Suggested Citation

Tabellini, Guido and Persson, Torsten, Do Electoral Cycles Differ Across Political Systems? (March 2003). IGIER Working Paper No. 232. Available at SSRN: https://ssrn.com/abstract=392643 or http://dx.doi.org/10.2139/ssrn.392643

Guido Tabellini (Contact Author)

University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) ( email )

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Centre for Economic Policy Research (CEPR)

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Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

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Bocconi University - Department of Economics ( email )

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Torsten Persson

London School of Economics & Political Science (LSE)

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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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London, EC1V 3PZ
United Kingdom

Stockholm University - Institute for International Economic Studies (IIES) ( email )

Stockholm, SE-10691
Sweden
+46 8 163066 (Phone)
+46 8 164177 (Fax)

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