Premium
Political budget cycles, incumbency advantage, and propaganda
Author(s) -
Bohn Frank
Publication year - 2019
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/ecpo.12122
Subject(s) - competence (human resources) , politics , empirical evidence , budget constraint , government (linguistics) , economics , government budget , public economics , political science , political economy , macroeconomics , microeconomics , law , management , philosophy , linguistics , epistemology , public finance
This paper combines incumbency advantage and political budget cycle theory. An opportunistic politician is given two instruments: deficit‐financed transfers and propaganda. Unlike earlier analytical models, but in accordance with the empirical literature, government manipulations do actually improve re‐election chances. However, the optimal level of government manipulation depends on country characteristics, in particular the competence dispersion among potential candidates. This may explain why it is easier to detect political budget cycles in, for instance, developing countries or new democracies. Results are robust to alternative competence distribution and propaganda cost assumptions.