Abstract:This paper examines the effects of elections on the conduct of central governments' fiscal policies. To do so, it uses a unique panel database that includes disaggregated spending and revenue series at the central government level for multiple countries over the 1975-2010 period. Examining political environments under which incumbent governments generate political budget cycles (PBCs), and comparing the relative importance of factors influencing cycles, we identify media freedom as the factor that plays the most critical role. This result provides a micro-foundation for rational opportunistic models for PBCs that rely on asymmetry of information about politicians' competence, and also offers a way to relate different conditioning factors of PBCs, including fiscal transparency and the maturity of democracies. Further, we show that the election-year rise in budget deficits under low media freedom is primarily driven by an increase in the current, not capital, component of public expenditure.

This paper studies the e↵ects of compositional changes in public expenditure on long-run growth. To do this, we assemble a new dataset based on the IMF's GFS yearbook for the period 1970-2010 and 56 countries (14 low, 16 medium, and 26 high income countries). Using dynamic panel GMM, we find that in general compositional changes in public spending are not statistically associated with growth. However, a robust result emerges when the change involves an increase in education spending. We find that a rise in education spending has a positive and statistically robust e↵ect on growth when the compensating component remains unspecified or when this is associated with a reduction in social protection spending. We also find that public capital spending, relative to current spending, appears to be associated with higher growth, yet in this case the result is not robust.

An inflation-targeting regime has been in place in Ghana since 2007, but the inflation rate has remained persistently high. During the 2007-2017 period, inflation exceeded the announced target by four percentage points on average, despite the target never falling below a relatively unambitious 8% per annum. We investigate whether the poor conduct of monetary policy is responsible for this outcome, and find that it is not. Monetary policy reaction functions are similar to those estimated for countries with successful monetary policies, and interest rates respond in the theoretically recommended way to inflation shocks.

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This article examines the effects of public spending reallocations on economic growth. Assembling a disaggregated public spending dataset of 83 countries over the 1970-2011 period, we show that spending reallocations toward education, from health and social protection, have significant growth-promoting effects across a wide range of countries' income levels. However, income heterogeneity matters, particularly when reallocations involve infrastructure spending. Specifically, a reallocation from this spending to education also promotes growth, albeit primarily when a country's income level is low. This occurs because the effects of infrastructure spending are particularly weak in low-income countries, possibly due to the low quality of governance. (JEL O43, H50, O11) 1. Clements et al. (2012), for example, discuss the expected increasing trends in health and pension spending in advanced and developing countries over the long run.2. Agénor (2010) shows, also theoretically, that a spending reallocation toward public infrastructure from "unproductive" spending can help increase growth rates, if public investment is sufficiently efficient.