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Autoren: 
Baskaran, Thushyanthan
Blesse, Sebastian
Brender, Adi
Reingewertz, Yaniv
Datum: 
2015
Reihe/Nr.: 
ZEW Discussion Papers 15-046
Zusammenfassung: 
This paper examines whether revenue decentralization and direct external financial supervision affect the incidence and strength of political budget cycles, using a panel of Israeli municipalities during the period 1999-2009. We find that high dependence on central government transfers - as reflected in a low share of locally raised revenues in the municipality's budget - exacerbates political budget cycles, while tight monitoring - exercised through central government appointment of external accountants to debt accumulating municipalities - eliminates them. These results suggest that political budget cycles can result from fiscal institutions that create soft budget constraints: that is, where incumbents and rational voters can expect that the costs of pre-election expansions will be partly covered later by the central government.
Schlagwörter: 
political budget cycles
soft budget constraint
local governments
decentralization
JEL: 
D72
H72
H74
E62
Persistent Identifier der Erstveröffentlichung: 
Dokumentart: 
Working Paper

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