The Political-Budget Cycle in Countries of the European Union



Year of publication 2011
Type Article in Periodical
Magazine / Source Národohospodárský obzor
MU Faculty or unit

Faculty of Economics and Administration

Field Economy
Keywords political-budget cycle structural balance election openess of democracy corruption political parties
Description We empirically estimate the political-budget cycle in the member countries of the European Union in period of 1988-2008. We indirectly analyze the potential of these countries to deal with increasing public debts which were augmented by global economic crisis. The selection of the EU countries depends on three characteristics of democracy – shared power, openness, adaptability. The openness of democracy is the most important characteristics in relation to effective behavior of governments. We suppose that governments are motivated to make electoral manipulation in countries which have the lower level of openness. We choose Finland, the Netherlands, Austria, Estonia, Poland, the Czech Republic, Romania and Greece to our sample of countries. The research of political-budget cycle confirmed our assumption. We did not find the political-budget cycle in Finland, the Netherlands and Estonia. On the other hand we identified that Austrian, Czech and Greece governments had tendency to manipulate fiscal policy before election. The regression coefficients of Poland electoral dummies were very statistically significant but they had wrong sign. We could not estimate political-budget cycle in Romania because of short time series.
Related projects:

You are running an old browser version. We recommend updating your browser to its latest version.