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Do Changes in Democracy Affect the Political Budget Cycle? Evidence from Mexico
Author(s) -
Gonzalez Maria de los Angeles
Publication year - 2002
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00150
Subject(s) - democracy , economics , estimation , government (linguistics) , affect (linguistics) , government spending , politics , econometric model , macroeconomics , fiscal policy , empirical evidence , public economics , econometrics , political science , market economy , linguistics , philosophy , management , epistemology , welfare , law
The previous empirical literature in opportunistic election cycles attempts to identify whether there is a significant impact of the election calendar on economic policy. The econometric analysis implemented in this paper goes a step further, seeking to test whether a country’s time‐varying degree of democracy affects the way in which economic policy is chosen as elections approach. A simple econometric model is estimated for the case of Mexico’s fiscal policy between 1957 and 1997. The estimation reveals the government’s strong systematic use of public spending in infrastructure and current transfers as a means to earn votes. Most importantly, we show that the magnitude of the election cycle has been exacerbated during the country’s most democratic episodes.