Seeing the forest through the trees: a meta-analysis of political budget cycles

Abstract

Despite a vast number of articles, the political budget cycle literature contains many conflicting theories and empirical results. I conduct the first ever meta-analysis of this literature in order to establish whether a link between elections and government budgets exists. Using data on 1198 estimates across 88 studies published between 2000 and 2015, I find evidence of a statistically significant—yet substantively small—increase in government expenditures and public debt around elections, and reductions in revenues and fiscal balance. Using meta-regression analysis combined with Bayesian model averaging, I find support for some of the context-conditional theories in the literature. Although the findings of political budget cycles are robust to publication bias as well as some of the methodological- and study-specific choices authors are forced to make, they also shed light on how certain decisions may affect a study’s findings. This has implications for current and future research on political budget cycles.

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Notes

  1. 1.

    Further details are in the Supplemental Materials.

  2. 2.

    As have others (Doucouliagos and Ulubaşoğlu 2008), I did not include unpublished results. I address potential publication bias in the Supplemental Materials.

  3. 3.

    Standard errors and p values were converted into t statistics if they were reported.

  4. 4.

    These results are available in the Supplemental Materials.

  5. 5.

    I recoded studies that examined deficit spending as their dependent variable, so that a positive partial correlation indicates an increase in fiscal surplus for all models.

  6. 6.

    In fact, fixed effects often overstate our confidence in the coverage probability of the true effect (Sánchez-Meca and Marín-Martínez 2008; Borenstein et al. 2011). This is formally tested through the Q test; I was able to reject the null hypothesis of no heterogeneity.

  7. 7.

    A detailed breakdown of these categories is in the Supplemental Materials.

  8. 8.

    Debt has only 22 model-study observations and is excluded.

  9. 9.

    There are two important priors to specify. The first is how many variables should be included in the “true” model. Since I have no prior expectation as to how many variables should be included, I chose a diffuse beta-binomial model prior (Ley and Steel 2009). The second set of priors concern the coefficients. I chose uninformed coefficient priors (Fernandez et al. 2001), although the findings remain robust to alternative priors, as detailed in the Supplemental Materials.

  10. 10.

    These are a regression of journal quality on precision, the precision-effect/funnel asymmetry (PET-FAT) test, and the precision effect estimate with standard error (PEESE).

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Acknowledgments

I wish to thank Lorena Barberia, Nathan Favero, Kendall Funk, David Switzer, Guy D. Whitten, the editors, and an anonymous reviewer for their comments and suggestions. Any errors and omissions remain my own.

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Correspondence to Andrew Q. Philips.

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Philips, A.Q. Seeing the forest through the trees: a meta-analysis of political budget cycles. Public Choice 168, 313–341 (2016). https://doi.org/10.1007/s11127-016-0364-1

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Keywords

  • Political budget cycle
  • Meta-analysis
  • Fiscal policy