This paper investigates the impact of elections on the level and composition of fiscal instruments using a sample of 19 high-income OECD democracies during the period 1972–1999. We find that elections shift public spending towards current expenditures at the cost of public investment. Although we find no evidence for an electoral cycle for government deficit and overall expenditures, we find a negative effect of elections on revenue attributed to a fall in direct taxation. Our results apply for predetermined electoral periods while endogenous elections seem to increase deficit and leave the composition of fiscal policy unaffected.
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Katsimi, M., Sarantides, V. Do elections affect the composition of fiscal policy in developed, established democracies?. Public Choice 151, 325–362 (2012). https://doi.org/10.1007/s11127-010-9749-8
- Political budget cycles
- Composition of fiscal policy
- Quality of public expenditure