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Political Budget Cycles. Evidence from Romania

Author

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  • Adina Trandafir

    (“Spiru Haret” University, Romania)

Abstract

Political budget cycle (PBC) refers to the cyclical fluctuation of fiscal policies determined by political cycles, respectively by the time of elections.. More precisely, it consists in the opportunistic behavior of governments, of politicians, regardless of their ideology, who try to use fiscal-budgetary policies to increase their chances of re-election. Using the Generalized Model of Moments, this article analyzes the impact of the political cycle on the budgetary and fiscal policy in Romania in the period 2006-2022. The results of the empirical model show a positive link between the political cycle and expenditures, which means that politicians use an opportunistically expansionist spending policy in election years to gain advantages for themselves and/or the parties they belong to. Also, the constructed model shows a negative connection between the political cycle and the national budget revenues.

Suggested Citation

  • Adina Trandafir, 2023. "Political Budget Cycles. Evidence from Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1123-1130, August.
    • Handle: RePEc:ovi:oviste:v:xxiii:y:2023:i:1:p:1123-1130
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    References listed on IDEAS

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    1. Alesina, Alberto & Sachs, Jeffrey, 1988. "Political Parties and the Business Cycle in the United States, 1948-1984," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 20(1), pages 63-82, February.
    2. Andrikopoulos, Andreas & Loizides, Ioannis & Prodromidis, Kyprianos, 2004. "Fiscal policy and political business cycles in the EU," European Journal of Political Economy, Elsevier, vol. 20(1), pages 125-152, March.
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    More about this item

    Keywords

    political cycles; political budget cycles; budget policy; fiscal policy; Generalized Model of Moments (GMM);
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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