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Defective democracy and the political budget cycle

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  • Lee, Dongwon
  • Min, Sujin

Abstract

Using a panel of democracies from 1987 to 2016, this study examines the effect of a defective democracy on the political budget cycle. To separate defective democracies from embedded democracies, we apply cluster analysis to the central elements of democracy. We find that the political budget cycle is significant only in defective democracies. Our finding indicates that the electoral cycle can persist even though democracies become old and economies become advanced. We also find that, of the central elements of democracy, weak rule of law and an ineffective government mainly explain the political budget cycle in defective democracies.

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  • Lee, Dongwon & Min, Sujin, 2021. "Defective democracy and the political budget cycle," Journal of Comparative Economics, Elsevier, vol. 49(4), pages 947-961.
    • Handle: RePEc:eee:jcecon:v:49:y:2021:i:4:p:947-961
    DOI: 10.1016/j.jce.2021.04.009
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    Cited by:

    1. de Haan, Jakob & Ohnsorge, Franziska & Yu, Shu, 2023. "Election-induced fiscal policy cycles in emerging market and developing economies," MPRA Paper 119551, University Library of Munich, Germany.
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    3. Feng, Jie & Gao, Junhong, 2023. "Natural resource curse hypothesis and governance: Understanding the role of rule of law and political risk in the context of China," Resources Policy, Elsevier, vol. 85(PB).

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    More about this item

    Keywords

    Political budget cycle; Election; Defective democracy; Rule of law;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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