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Title:Political cycles in income from privatization: The case of Albania PDF Logo
Authors:Imami, Drini
Lami, Endrit
Kächelein, Holger
Issue Date:2011
Series/Report no.:BERG working paper series on government and growth 77
Abstract:The phenomenon of manipulation of the economy by the incumbent for electoral purpose is called Political Business Cycles (PBC). Using policy control economic instruments, such as fiscal and monetary instruments, governments may manipulate the economy to gain electoral advantage by producing growth and decreasing unemployment before elections. Earlier research on PBC in Albania found clear evidence of fiscal expansion before elections. In addition to increased income from taxes and borrowing, another source of financing the increased fiscal expansion in transition countries may be income from privatization, which is also the object of the analysis of this paper. In our analysis we apply standard econometric approach, used widely for research related to PBC. We test if income from privatization increases before elections. We find statistically significant increase of income from privatization before general (parliamentary) elections, which may lead us to conclude that one of the reasons may be to finance increased expenditures before elections. Another motivation, behind this behavior of the incumbent, may be rent - seeking. These results are of particular interest, as it is for the first time that income from privatization is analyzed in conjunction with PBC.
Subjects:Albania
Political Business Cycle
Privatization
JEL:E32
O23
H61
ISBN:978-3-931052-87-4
Document Type:Working Paper
Appears in Collections:BERG Working Paper Series, Universität Bamberg

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