General or central government? Empirical evidence on political cycles in budget composition using new data for OECD countries

Potrafke, Niklas

doi:10.1016/j.ejpoleco.2020.101860

Cited by 27 publications

(18 citation statements)

References 61 publications

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“…On the other hand, it is suggested that right‐wing governments are more concerned with reducing inflation and appeals more towards capital owners (Cahan et al., 2019; Castro & Martins, 2021). As a result, economic growth is expected to be higher under left‐wing governments as they implement more expansionary fiscal and monetary policies (Potrafke, 2020). Meanwhile, recent empirical studies show that left‐wing governments are associated with larger expenditures, while right‐wing governments spend less, confirming the anecdotal suggestion that claims left‐wing governments are larger in size (Magkonis et al., 2021).…”

Section: Introductionmentioning

confidence: 99%

Does Government Ideology Affect the Relationship Between Government Spending and Economic Growth?

Haini

Loon

2021

J of App Econs and Policy

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This study examines whether government ideology affects the relationship between government spending and economic growth in eighty eight countries from 1975 to 2017 using dynamic panel estimators. Previous studies have overlooked the role of government ideology, which can influence economic policies such as government spending. The results show that government spending is negative and significant to economic growth, while left‐wing governments are associated with economic growth. However, when moderating for government ideology, the findings show that the marginal effect of government spending is positive for right‐wing governments, while the marginal impact of government spending is negative for left‐wing governments. The results imply that government spending policies must be aligned with the respective government ideology in order to benefit from further economic growth. Policy implications are discussed.

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Section: Introductionmentioning

confidence: 99%

Does Government Ideology Affect the Relationship Between Government Spending and Economic Growth?

Haini

Loon

2021

J of App Econs and Policy

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“…There is also evidence that governments increase the relative weight of education, social protection, and some sub-components of health expenditure [6], as well as variations related to government ideology [9], with the left more likely to increase spending on education and the right on public services. Several authors have also found that the electoral cycle has a special impact on social expenditure and infrastructure [10].…”

Section: Political Business Cycle (Pbc) Revisitedmentioning

confidence: 99%

Mayors, Using Cultural Expenditure in An Opportunistic Way Improves the Chances of Re-Election, but Do Not Do It: Revisiting Political Budget Cycles

et al. 2020

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This article analyzes whether expenditure on the provision of merit goods, culture, health, education, and sports, by local governments, in medium-sized cities (between 20,000 and 100,000 inhabitants) is tied to the electoral cycle; that is, whether expenditure increases in the run up to an electoral process. Further, we analyze whether the increase in spending on Culture by local governments has any significant effect on the probability of local governments being re-elected. To answer these questions, a database of 350 medium-sized municipalities is used comprising the period 2011 to 2019, when two municipal elections were held in Spain; in 2015 and in 2019. The results confirm that both total spending and spending on culture and sports, are tied to the electoral cycle, while expenditure on other merit goods is not. Moreover, using a logit model, it is confirmed that an increase in culture expenditure has a significant effect on the probability of the government being re-elected. Specifically, a one-third increase in cultural expenditure, as a proportion of total expenditure (e.g., passing from 6% to 8%) at local government level, improves re-election chances by almost 10%.

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“…However, general government data include data of subnational governments (states, provinces, municipalities) that the national government may not influence (e.g. Castro and Martins, 2018;Potrafke, 2019). It is therefore useful to compare how national government's characteristics influence central and general government data.…”

Section: Data and Descriptive Statistics Budgets Deficits And Public Expenditurementioning

confidence: 99%

Fiscal performance of minority governments: New empirical evidence for OECD countries

Potrafke

2019

Party Politics

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I use new data on central and general governments for 23 OECD countries over the period 1960-2015 (unbalanced panel) to examine fiscal performance under minority governments. The results do not suggest that minority governments had higher fiscal deficits and public expenditure than majority governments -corroborating many previous studies. An innovation of my study is to examine fiscal policies of minority governments that enjoy organized support of opposition parties. The results do not show that minority governments that enjoy organized support of opposition parties increased public expenditure to a larger extent than majority governments. If anything, fiscal deficits were somewhat higher under single-party minority governments with organized support of opposition parties than under majority governments especially. Minority and majority governments had quite similar fiscal performance in OECD countries. JEL-Codes: D720, H000, C230, P160.

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General or central government? Empirical evidence on political cycles in budget composition using new data for OECD countries

Cited by 27 publications

References 61 publications

Does Government Ideology Affect the Relationship Between Government Spending and Economic Growth?

Does Government Ideology Affect the Relationship Between Government Spending and Economic Growth?

Mayors, Using Cultural Expenditure in An Opportunistic Way Improves the Chances of Re-Election, but Do Not Do It: Revisiting Political Budget Cycles

Fiscal performance of minority governments: New empirical evidence for OECD countries

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