Fiscal Policy over the Election Cycle in Low-Income Countries / Christian Ebeke, Dilan Ölcer.

Format:

Book

Government document

Author/Creator:

Ebeke, Christian.

Contributor:

Ölc̮er, Dilan.

Series:

IMF Working Papers; Working Paper ; No. 2013/153

IMF Working Papers

Language:

English

Subjects (All):

Fiscal policy--Political aspects--Developing countries.

Fiscal policy.

Elections--Economic aspects--Developing countries.

Elections.

Physical Description:

1 online resource (26 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2013.

Language Note:

English

Summary:

Focusing on Low-Income Countries, we investigate the behavior of fiscal variables during and after elections. The results indicate that during election years, government consumption significantly increases and leads to higher fiscal deficits. During the two years following elections, the fiscal adjustment takes the form of increased revenue mobilization in trade taxes and cuts to government investment, with no significant cuts in government consumption. Using a new dataset on national fiscal rules and IMF programs, we find that both the presence of fiscal rules and IMF programs help dampen the magnitude of the political budget cycle in LICs. We conclude that elections not only imply a macroeconomic cost when they take place but also trigger a painful fiscal adjustment in which public investment is largely sacrificed.

Contents:

Cover; Abstract; Content; I. Introduction; II. How is fiscal policy conducted over the election cycle? Preliminary evidence; A. Baseline specification and data; B. Baseline estimates; Composition of expenditures; Composition of tax revenues; Overall fiscal balance; III. Dealing with the endogeneity of election timing; IV. Domestic and international scrutiny; A. Do fiscal rules matter?; B. IMF program engagement; V. Concluding remarks; References; Appendix; Table A1: List of countries in the sample and number of national elections by country, 1990-2010

Table A2: Descriptive statistics. LICs sample, 1990-2010Table A3: Correlates of the participation into Fund programs in LICs; Regression results; Table 1. Estimates of the Political Budget Cycle across selected Fiscal Variables in LICs: 1990-2010; Table 2. Addressing the endogeneity of the election timing in LICs. 1990-2010; Table 3. Do fiscal rules and IMF programs dampen the Political Budget Cycle in LICs?

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on print version record.

ISBN:

9781484316382

148431638X

9781484307687

1484307682

9781484319796

1484319796