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Government Expenditure and Political Business Cycle

Author

Listed:
  • Chong-Bum An

    (Sungkyunkwan University)

  • Seoghoon Kang

    (Sungshin Women's University)

Abstract

We attempt to observe the existence of political business cycle by finding empirical evidence of the eflects of elections on government spendings, employing the Korean data. Using annual data from I970-1998 and dummy variables denoting election year or election lags, we employ the two stage estimation method. The estimated coeflicients of dummy variable indicating the year of election are all positive in all speciï¬ cations and in some cases statistically significant. The estimated coeflicients of other dummy variables indicating the lag to the election are all negative. And the absolute value of negatively estimated coeflicients are larger as the election lag becomes longer. These facts all together strongly suggest the existence of negative relationship between election lag and government expenditure, which verifies the existence of the political business cycle.

Suggested Citation

  • Chong-Bum An & Seoghoon Kang, 2000. "Government Expenditure and Political Business Cycle," Korean Economic Review, Korean Economic Association, vol. 16, pages 193-206.
    • Handle: RePEc:kea:keappr:ker-200012-16-2-01
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    Cited by:

    1. Andrea Cardoni & Evgeniia Kiseleva & Paolo Taticchi, 2020. "In Search of Sustainable Value: A Structured Literature Review," Sustainability, MDPI, vol. 12(2), pages 1-18, January.

    More about this item

    Keywords

    Government Expenditure; Political Business Cycle; Two Stage Estimation;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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