|Author (Person)||de Haan, Jakob, Mink, Mark|
|Series Title||European Union Politics|
|Series Details||Vol.7, No.2, June 2006, p191-211|
|Publication Date||June 2006|
|Content Type||Journal | Series | Blog|
This article examines whether there is a political budget cycle (PBC) in countries in the euro area. Using a multivari ate model for 1999-2004 and various election indicators we find strong evidence that, since the start of the Stability and Growth Pact, fiscal policy-makers in the euro area have pursued expansionary policies before elections. In an elec tion year – but not in the year prior to the election – the budget deficit increases. This result is in line with third-generation PBC models, which are based on moral hazard. We also find a significant but small partisan effect on fiscal policy outcomes.
|Subject Categories||Economic and Financial Affairs|
|Countries / Regions||Europe|