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Political budget cycles in the European Union and the impact of political pressures

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  • Georgios Efthyvoulou

Abstract

This paper investigates the presence of political budget cycles (PBCs) in the European Union using data from all 27 member states over the period 1997–2008, and explores their variability across countries and over time. Three basic results emerge: First, incumbent governments across the EU tend to engineer PBCs in order to enhance their re-election prospects. Second, PBCs are much larger and statistically more robust in the Eurozone countries than in the countries that have not yet adopted the euro. Third, the degree to which governments manipulate fiscal policy is negatively correlated with non-economic voting and positively correlated with electoral competitiveness. Copyright Springer Science+Business Media, LLC 2012

Suggested Citation

  • Georgios Efthyvoulou, 2012. "Political budget cycles in the European Union and the impact of political pressures," Public Choice, Springer, vol. 153(3), pages 295-327, December.
    • Handle: RePEc:kap:pubcho:v:153:y:2012:i:3:p:295-327
    DOI: 10.1007/s11127-011-9795-x
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    More about this item

    Keywords

    Political budget cycles; Fiscal policy; Elections; Opinion polls; European Union; D72; E62; P16; C33;
    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
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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