Political Budget Cycle Analysis
Political budget cycle analysis is an econometric framework for detecting whether incumbent governments manipulate fiscal policy — deficits, public spending, or taxes — in the run-up to elections to signal competence and win votes. Kenneth Rogoff's 1990 equilibrium model gave the idea rational micro-foundations: even forward-looking voters can be temporarily fooled when competence is imperfectly observed, so able incumbents distort the fiscal mix before an election to separate themselves from less able rivals. Empirically the cycle is identified by an election-timing indicator in a fixed-effects panel regression of fiscal outcomes, and Brender and Drazen's 2005 study showed the effect is concentrated in new, inexperienced democracies rather than established ones.
Source record
Citations copied verbatim from the method’s source record. No claim-level verification is inferred from them.
- Rogoff, K. (1990). Equilibrium Political Budget Cycles. American Economic Review, 80(1), 21-36. · URL
- Brender, A., & Drazen, A. (2005). Political Budget Cycles in New versus Established Democracies. Journal of Monetary Economics, 52(7), 1271-1295. · DOI 10.1016/j.jmoneco.2005.04.004
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