TY  - JOUR
AU  - Brender,Adi
AU  - Drazen,Allan
TI  - Political Budget Cycles in New versus Established Democracies
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10539
PY  - 2004
Y2  - June 2004
UR  - http://www.nber.org/papers/w10539
L1  - http://www.nber.org/papers/w10539.pdf
N1  - Author contact info:
Adi Brender
Research Department
Bank of Israel
Jerusalem 91007
ISRAEL
E-Mail: adib@bankisrael.gov.il

Allan Drazen
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3477
Fax: 301/405-7835
E-Mail: drazen@econ.umd.edu
AB  - Like other recent studies, we find the existence of a political deficit cycle in a large cross-section of countries. However, we find that this result is driven by the experience of  new democracies'. The strong budget cycle in those countries accounts for the finding of a budget cycle in larger samples that include these countries; when these countries are removed from the larger sample, so that only  established' democracies remain, the political budget cycle disappears. The political deficit cycle in new democracies accounts for findings in both developed and less developed economies, for the finding that the cycle is stronger in weaker democracies, and for differences in the political cycle across governmental and electoral systems. Our findings may reconcile two contradictory views of pre-electoral manipulation, one arguing it is a useful instrument to gain voter support and a widespread empirical phenomenon, the other arguing that voters punish rather than reward fiscal manipulation.
ER  -