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Do Changes in Democracy Affect the Political Budget Cycle? Evidence from Mexico

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  • Maria de los Angeles Gonzalez

Abstract

The previous empirical literature in opportunistic election cycles attempts to identify whether there is a significant impact of the election calendar on economic policy. The econometric analysis implemented in this paper goes a step further, seeking to test whether a country’s time‐varying degree of democracy affects the way in which economic policy is chosen as elections approach. A simple econometric model is estimated for the case of Mexico’s fiscal policy between 1957 and 1997. The estimation reveals the government’s strong systematic use of public spending in infrastructure and current transfers as a means to earn votes. Most importantly, we show that the magnitude of the election cycle has been exacerbated during the country’s most democratic episodes.

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  • Maria de los Angeles Gonzalez, 2002. "Do Changes in Democracy Affect the Political Budget Cycle? Evidence from Mexico," Review of Development Economics, Wiley Blackwell, vol. 6(2), pages 204-224, June.
    • Handle: RePEc:bla:rdevec:v:6:y:2002:i:2:p:204-224
    DOI: 10.1111/1467-9361.00150
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    Cited by:

    1. Pailler, Sharon, 2018. "Re-election incentives and deforestation cycles in the Brazilian Amazon," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 345-365.
    2. Georgios Chortareas & Vassilis E. Logothetis & Andreas A. Papandreou, 2017. "Political cycles in Greece’s municipal employment," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 20(4), pages 321-342, October.
    3. Manoel Bittencourt, 2012. "Economic Growth and Government Debt: Evidence from the Young Democracies of Latin America," Working Papers 201203, University of Pretoria, Department of Economics.
    4. Manoel Bittencourt, 2011. "Young Democracies and Government Size: Evidence from Latin America," Working Papers 201113, University of Pretoria, Department of Economics.
    5. Manoel Bittencourt, 2015. "Determinants of Government and External Debt: Evidence from the Young Democracies of South America," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(3), pages 463-472, May.
    6. Alesina, Alberto & Stella, Andrea, 2010. "The Politics of Monetary Policy," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 18, pages 1001-1054, Elsevier.
    7. Eslava, Marcela & Streb, Jorge M., 2011. "Comments," LSE Research Online Documents on Economics 123271, London School of Economics and Political Science, LSE Library.
    8. Stéphane Goutte & David Guerreiro & Bilel Sanhaji & Sophie Saglio & Julien Chevallier, 2019. "International Financial Markets," Post-Print halshs-02183053, HAL.
    9. Manoel Bittencourt, 2018. "Young Democracies and Government Size: Evidence from South America," Working Papers 329, Economic Research Southern Africa.

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