IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v48y1986i3p201-215.html
   My bibliography  Save this article

The political process and the use of debt financing by state governments

Author

Listed:
  • William Baber
  • Pradyot Sen

Abstract

Empirical evidence offered in this study suggests that decisions by state government officials to effect debt-financed spending depend in part on the state's gubernatorial election cycle. More specifically, the results reveal relative increases in state debt issues in anticipation of elections, and furthermore, they reveal that such increases are more significant for states characterized by high interparty political competition. While theoretical limitations preclude a definitive explanation for these results, the evidence is consistent with a view of state political markets where incumbent parties manipulate public policy so as to enhance the probability of success in pending elections. This insight is significant in that it suggests a relationship between public policy decisions and election cycles in a context heretofore unexplored. Copyright Martinus Nijhoff Publishers 1986

Suggested Citation

  • William Baber & Pradyot Sen, 1986. "The political process and the use of debt financing by state governments," Public Choice, Springer, vol. 48(3), pages 201-215, January.
    • Handle: RePEc:kap:pubcho:v:48:y:1986:i:3:p:201-215
    DOI: 10.1007/BF00051618
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF00051618
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/BF00051618?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Richard E. Wagner, 1977. "Economic Manipulation For Political Profit: Macroeconomic Consequences And Constitutional Implications," Kyklos, Wiley Blackwell, vol. 30(3), pages 395-410, August.
    2. Sharkansky, Ira & Hofferbert, Richard I., 1969. "Dimensions of State Politics, Economics, and Public Policy," American Political Science Review, Cambridge University Press, vol. 63(3), pages 867-879, November.
    3. George Stigler, 1972. "Economic competition and political competition," Public Choice, Springer, vol. 13(1), pages 91-106, September.
    4. Martin Paldam, 1981. "An essay on the rationality of economic policy: The test-case of the electional cycle," Public Choice, Springer, vol. 37(2), pages 287-305, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diane Lim Rogers & John H. Rogers, 1995. "Political competition, causal relationships between taxes and spending, and their influence on government size: evidence from state-level data," International Finance Discussion Papers 500, Board of Governors of the Federal Reserve System (U.S.).
    2. Michael A. Ellis & D. Eric Schansberg, 1999. "The Determinants of State Government Debt Financing," Public Finance Review, , vol. 27(6), pages 571-587, November.
    3. Borge, Lars-Erik, 2005. "Strong politicians, small deficits: evidence from Norwegian local governments," European Journal of Political Economy, Elsevier, vol. 21(2), pages 325-344, June.
    4. John Ashworth & Bruno Heyndels, 2005. "Government Fragmentation And Budgetary Policy In “Good” And “Bad” Times In Flemish Municipalities," Economics and Politics, Wiley Blackwell, vol. 17(2), pages 245-263, July.
    5. Fox, William F. & Gurley, Tami, 2006. "Will consolidation improve sub-national governments ?," Policy Research Working Paper Series 3913, The World Bank.
    6. Elton Beqiraj & Silvia Fedeli & Francesco Forte, 2018. "Public budgetary rules and GDP growth: An empirical study on OECD and twelve european countries," Southern Economic Journal, John Wiley & Sons, vol. 85(1), pages 170-188, July.
    7. John Ashworth & Benny Geys & Bruno Heyndels, 2005. "Government Weakness and Local Public Debt Development in Flemish Municipalities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 395-422, August.
    8. Carlos Serrano-Cinca & Mar Rueda-Tomás & Pilar Portillo-Tarragona, 2009. "Factors Influencing E-Disclosure in Local Public Administrations," Environment and Planning C, , vol. 27(2), pages 355-378, April.
    9. Sanghee Park, 2018. "Understanding Public Sector Debt: Financial Vicious Circle under the Soft Budget Constraint," Public Organization Review, Springer, vol. 18(1), pages 71-92, March.
    10. Boll David & Sidki Marcus, 2017. "Die politische Ökonomie deutscher Landkreise: Determinanten der Verschuldung," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 66(3), pages 266-293, December.
    11. repec:bla:ecopol:v:17:y:2005:i::p:245-263 is not listed on IDEAS
    12. Beatriz Cuadrado-Ballesteros & Noemí Mordán & Isabel-María García-Sánchez, 2014. "Is Local Financial Health Associated with Citizens’ Quality of Life?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 119(2), pages 559-580, November.
    13. Andreas Kern & Puspa Amri, 2021. "Political credit cycles," Economics and Politics, Wiley Blackwell, vol. 33(1), pages 76-108, March.
    14. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Post-Print hal-01291401, HAL.
    15. John Merrifield, 1994. "Factors That Influence the Level of Underground Government," Public Finance Review, , vol. 22(4), pages 462-482, October.
    16. Eric Dubois, 2016. "Political business cycles 40 years after Nordhaus," Public Choice, Springer, vol. 166(1), pages 235-259, January.
    17. Wen Wang & Bo Zhao, 2017. "Transparency in state debt disclosure," Working Papers 17-10, Federal Reserve Bank of Boston.
    18. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    19. Amanda W. Beck, 2018. "Opportunistic financial reporting around municipal bond issues," Review of Accounting Studies, Springer, vol. 23(3), pages 785-826, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chaudhry, Ahmed & Mazhar, Ummad, 2018. "Political competition and economic performance: Empirical evidence from Pakistan," Economics Discussion Papers 2018-27, Kiel Institute for the World Economy (IfW Kiel).
    2. Chaudhry, Ahmed & Mazhar, Ummad, 2019. "Political competition and economic policy: Empirical evidence from Pakistan," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-27.
    3. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    4. Monika Köppl-Turyna, 2016. "Opportunistic politicians and fiscal outcomes: the curious case of Vorarlberg," Public Choice, Springer, vol. 168(3), pages 177-216, September.
    5. François Facchini & Mickaël Melki, 2012. "Political Ideology and Economic Growth in a Democracy: The French Experience, 1871 - 2009," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00662838, HAL.
    6. Yogesh Uppal, 2011. "Does legislative turnover adversely affect state expenditure policy? Evidence from Indian state elections," Public Choice, Springer, vol. 147(1), pages 189-207, April.
    7. Galasso, Vincenzo & Nannicini, Tommaso, 2011. "Competing on Good Politicians," American Political Science Review, Cambridge University Press, vol. 105(1), pages 79-99, February.
    8. Persson, Torsten & Tabellini, Guido, 1999. "The size and scope of government:: Comparative politics with rational politicians," European Economic Review, Elsevier, vol. 43(4-6), pages 699-735, April.
    9. Michael McKee, 1988. "Political competition and the Roman Catholic schools: Ontario, Canada," Public Choice, Springer, vol. 56(1), pages 57-67, January.
    10. Sivadasan, Jagadeesh & Xu, Wenjian, 2021. "Missing women in India: Gender-specific effects of early-life rainfall shocks," World Development, Elsevier, vol. 148(C).
    11. Blankenau, William & Skidmore, Mark, 2002. "The Relationship Between Education Finance Reform and Tax and Expenditure Limitations," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 32(1), pages 1-18.
    12. Timothy Besley & Torsten Persson & Daniel Sturm, 2005. "Political Competition and Economic Performance: Theory and Evidence from the United States," NBER Working Papers 11484, National Bureau of Economic Research, Inc.
    13. Stefano Bartolini, 2000. "Collusion, Competition and Democracy," Journal of Theoretical Politics, , vol. 12(1), pages 33-65, January.
    14. Hannelore Weck-Hannemann, 1987. "Politisch-ökonomische Bestimmungsgründe der Vergabe von Entwicklungshilfe: Eine empirische Untersuchung für die Schweiz," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 123(IV), pages 501-529, December.
    15. John Burnett & Chris Paul & Allen Wilhite, 1997. "Political Campaigns as Rent-Seeking Games: Take the Money and Run," Public Finance Review, , vol. 25(5), pages 509-521, September.
    16. Niklas Potrafke, 2012. "Political cycles and economic performance in OECD countries: empirical evidence from 1951–2006," Public Choice, Springer, vol. 150(1), pages 155-179, January.
    17. Glenn Parker & Matthew Dabros, 2012. "Last-period problems in legislatures," Public Choice, Springer, vol. 151(3), pages 789-806, June.
    18. Werner W. Pommerehne & Bruno S. Frey, 1976. "Two Approaches To Estimating Public Expenditures," Public Finance Review, , vol. 4(4), pages 395-407, October.
    19. Janet Kiholm Smith & Richard L. Smith, 1984. "State and Local Fiscal Policy: Implications for Property Values and Economic Growth," Public Finance Review, , vol. 12(1), pages 51-76, January.
    20. Alexander W. Salter & William J. Luther, 2019. "Adaptation and central banking," Public Choice, Springer, vol. 180(3), pages 243-256, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:48:y:1986:i:3:p:201-215. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.