Fighting with one hand tied behind the back: political budget cycles in the West German states

By C. Schneider. 2009

136 citations recorded by the source corpus.

Theories of political budget cycles have been contested because scholars find that incumbents can manipulate deficits in the pre-election period only if fiscal transparency is low. I argue that these findings do not generally rule out the possibility of fiscal electioneering. Governments may increase spending on highly visible policies. The composition of the budget serves as a second-best strategy. It increases political support without straining the budget balance. An empirical analysis of the West German states reveals alternative electoral budget strategies and ultimately point to the importance of analyzing how governments choose between alternative fiscal instruments.

Subfields: Economics and Econometrics, Finance, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/3d71153f0cf75782e4fe57588ff8cc75823a8fb3

How researchers see this paper

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In Economics and Econometrics

1. Eric Dubois
2. Antonio Navas
3. V. Bove
4. Georgios Efthyvoulou
5. Niklas Potrafke

In Finance

1. Antonio Navas
2. Eric Dubois
3. V. Bove
4. Georgios Efthyvoulou

In Political Science and International Relations

1. Eric Dubois
2. Antonio Navas
3. V. Bove
4. Georgios Efthyvoulou

Citations in the corpus

• Political Cycles in Public Expenditure: Butter vs Guns (2017, result): “A number of studies lend empirical support to this prediction using either multi-county panel data ( Schuknecht, 20 0 0; Vergne, 20 09; Katsimi and Sarantides, 2012 ) or data for local government elections ( Schneider, 2010; Veiga and Veiga, 2007 ).”
• Political business cycles 40 years after Nordhaus (2016, background): “The presence of such an effect is found in Vergne (2009), Aidt et al. (2011) and Benito et al. (2013b), but is rejected by Chaudhuri and Dasgupta (2005) and Schneider (2010).16 The threat of losing an election is only one aspect of the context.”
• Conditional political budget cycles: a review of recent evidence (2013, unknown): “For instance, Schneider (2010) finds that even though incumbents on the German state level reduce deficit spending and maintain a balanced budget they do increase social transfers in the pre-election period, while Dahlberg and Mörk (2011) report a statistically significant election year effect in…”
• Do elections affect the composition of fiscal policy in developed, established democracies? (2010, unknown): “Finally, Schneider (2010) argues that the high degree of fiscal transparency in Germany restricts the possibility of deficit creation, inducing governments to manipulate elections by increasing ‘visible’ spending.”