Temporal Aggregation in Political Budget Cycles

Streb, Jorge M.; Lema, Daniel

doi:10.2139/ssrn.1485702

Cited by 14 publications

(23 citation statements)

References 19 publications

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“…balanced budget requirements or budget targets (Hallerberg and von Hagen 1998;Clark and Hallerberg 2000;Rose 2006;Alt and Rose 2007;Donahue and Warin 2007;Schneider 2010;Garcia-Sanchez et al 2011;Benito et al 2013a;Klomp and de Haan 2013c), delegation to a strong finance minister (Hallerberg and von Hagen 1998;Clark and Hallerberg 2000), checks and balances 23 (Chang 2008;Streb et al 2009Streb et al , 2012Streb et al , 2013Ho and Huang 2013;Shelton 2014) and transparency 24 (Alt and Lassen 2006;Alt and Rose 2007;Vicente et al 2013;Shelton 2014). …”

Section: Constraints On Economic Policymentioning

confidence: 99%

Political business cycles 40 years after Nordhaus

Dubois

2016

Public Choice

174

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Abstract:The aim of this article is to survey the huge literature that has emerged in the last four decades following Nordhaus's (1975) publication on political business cycles (PBCs). I first propose some developments in history of thought to examine the context in which this ground-breaking contribution saw the light of the day. I also present a simplified version of Nordhaus's model to highlight his key results. I detail some early critiques of this model and the fields of investigations to which they gave birth. I then focus on the institutional context and examine its influence on political business cycles, the actual research agenda. Finally, Iderive some paths for future research.

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Section: Constraints On Economic Policymentioning

confidence: 99%

Political business cycles 40 years after Nordhaus

Dubois

2016

Public Choice

174

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“…By using the weighted average of the adequately powered (WAAP) developed by Ioannidis et al ., () and Stanley et al ., () we find only 24 estimates in Streb et al ., ()–over 1,037 estimates–with adequate power. The WAAP consists to keep any estimate with a standard error less than or equal to (⩽)

false| \frac{\overset{β_{1}}{true}}{2.80} false|

, where

\overset{β_{1}}{true}

is estimated from a WLS estimator and the following model:

r_{i j} = β_{1} S E_{i j} + ε_{i j}

(same notation as the Equation but without any intercept).…”

mentioning

confidence: 94%

Political Budget Cycles: Manipulation by Leaders Versus Manipulation by Researchers? Evidence From a Meta‐regression Analysis

Mandon¹,

Cazals²

2018

Journal of Economic Surveys

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Despite a long history of research on political budget cycles, their existence and magnitude are still in question. By conducting a systematic analysis of the existing literature, we intend to clarify the debate. Based on data collected from 1037 regressions in 46 studies, our meta‐analysis suggests that little, if any, systematic evidence can be found in the research record that national leaders do manipulate fiscal tools in order to be reelected. However, it is much more clear that researchers selectively report that national leaders do manipulate fiscal tools in order to be reelected. The publication selection bias highlighted has nonetheless been reduced during the past 25 years of research. We also show that the incumbents' strategies differ depending on which tools they use. Finally, the nature and quality of political institutions appear to be the factors which most affect the political budget cycles.

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“…The problem with this approach is that it does not allow identifying the election year precisely: since elections can take place any moment between January and December, part of the election year may in fact fall in the previous calendar year. 9 Streb, Lema, and Garofalo (2012) propose an alternative procedure to identify the election year. Using quarterly data, they define the election year as the four quarters up to the election quarter.…”

Section: Identifying the Election Year With Different Data Frequmentioning

confidence: 99%

“…We now turn to a potentially omitted factor that has turned out to be important to reconcile the differential behavior of Latin America and the OECD in political budget cycles, namely the presence of legislative checks and balances in countries with strong rule of law (Streb, Lema, and Garofalo 2012). There is a big difference between the regions due to the weaker effective checks and balances that the executive faces in Latin America.…”

Section: Controlling For Effective Checks and Balancesmentioning

confidence: 99%

“…In this context, they expect a sale of foreign exchange reserves in order to avoid the depreciation of the exchange rate. The rationale they provide is through the portfolio balance approach: if the sale of the reserve currency is sterilized by both central banks, the net effect is an increase in reserve currency bonds and a decrease in domestic currency bonds, which raises the domestic rate of monetary expansion consistent with exchange rate stability (Dreher and Vaubel 2009: 757 (Streb, Lema, and Garofalo 2012). On the other hand, there are also significant exchange rate adjustments after elections in Latin America (see Table A2), so they may be playing a role in these postelectoral fiscal adjustments.…”

Section: How To Interpret These Electoral Cycles?mentioning

confidence: 99%

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Electoral Cycles in International Reserves: Evidence from Latin America and the OECD

2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Pablo Garofalo University of Houston October 2013In Latin America there is ample evidence of exchange rate depreciations after elections. Hence, we turn to the behavior of international reserves over the 1980-2005 period to investigate if exchange rates are temporarily stabilized before elections. Using annual, quarterly, and monthly data to define the election year, we find that international reserves fall significantly before elections, which indeed suggests a policy of stabilizing exchange rates. The patterns observed in the region are not replicated in OECD countries. However, once we control for legislative checks and balances on executive discretion in countries with strong compliance with the law, the behavior of both regions becomes remarkably similar. We find that lower effective checks and balances can explain why reserves fall before elections in Latin America. The electoral cycles in reserves and exchange rates in Latin America can be interpreted in terms of the fiscal dominance of monetary policy. JEL classification codes: D72, D78, H60

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Temporal Aggregation in Political Budget Cycles

Cited by 14 publications

References 19 publications

Political business cycles 40 years after Nordhaus

Political business cycles 40 years after Nordhaus

Political Budget Cycles: Manipulation by Leaders Versus Manipulation by Researchers? Evidence From a Meta‐regression Analysis

Electoral Cycles in International Reserves: Evidence from Latin America and the OECD

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