Political Budget Cycles in Latin America. A Dynamic Panel Analysis
DOI:
https://doi.org/10.17533/udea.espo.n62a11Keywords:
Elections, Political Economy, Political Budget Cycles, Latin AmericaAbstract
The article examines the correlation between government spending and election cycles in 19 Latin American countries during 1990 to 2017. The results obtained through the generalized method of moments (GMM) suggest that current expenditure increases by about 0.44% of Gross Domestic Product (GDP) during election years compared to non-election years. Although the election year does not have an effect on capital expenditure, this component decreases by about 0.27% of GDP during post-election years. These results demonstrate the existence of different dynamics of the impact of elections on the components of government spending. The level of presidential approval seems not to affect the incentives of politicians to manipulate economic outcomes for electoral purposes.
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