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Political business cycles and construction licensing : Evidence from post‐socialist Tirana, Albania (1994–2015)

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  • Drini Imami
  • Luca J. Uberti
  • Endrit Lami
  • Edvin Zhllima

Abstract

We analyze the effects of opportunistic and partisan politics on the licensing of construction activities, which in turn determines the level of housing supply. In line with Political Business Cycle theory, we hypothesize that the municipal incumbent may manipulate the supply of construction permits before (general and local) elections in order to boost economic activity and voter satisfaction, or to accommodate special‐interest groups. Our findings, based on time‐series data from post‐socialist Tirana (Albania), are consistent with opportunistic and partisan incentives’ creating cycle effects in the licensing of construction permits. However, we find that the direction of opportunistic election cycles depends critically on the interaction between the municipal incumbent and the central‐level government. Our paper raises important questions about the effects of transition politics on spatial development in post‐socialist cities.

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  • Drini Imami & Luca J. Uberti & Endrit Lami & Edvin Zhllima, 2018. "Political business cycles and construction licensing : Evidence from post‐socialist Tirana, Albania (1994–2015)," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(3), pages 523-552, July.
    • Handle: RePEc:bla:etrans:v:26:y:2018:i:3:p:523-552
    DOI: 10.1111/ecot.12151
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    1. Imami, Drini & Lami, Endrit & Pojani, Dorina, 2022. "Informal construction as political currency: A theory of ‘election-driven informality’," Land Use Policy, Elsevier, vol. 112(C).

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