Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/199067
Authors: 
Krause, Manuela
Year of Publication: 
2019
Series/Report no.: 
ifo Working Paper No. 293
Abstract: 
The political business cycle theories describe that election-motivated politicians manipulate economic policy-making. Election cycles occur in many fiscal variables, for example tax rates. I examine whether electoral motives influence communal fees in Germany. Fees have to be paid for the use of many public services, for example waste management or sewerage provisions. Fees should be equivalent to the costs of a public service and thus correspond to the benefit principle in public finance. The German municipalities, however, have a leeway to determine fees. I use revenue data for around 7,000 West German municipalities from seven states over the period 1992–2006. The results show that municipalities increase communal fees in election years to a smaller extent than in the middle of the legislative period, while they increase fees more directly after elections. Fees increase in election years by 0.94 euro per capita less and directly after elections by 1.74 euro per capita more than in the middle of the legislative period. The results thus corroborate the predictions of the political business cycle theories.
Subjects: 
Electoral cycles
political business cycles
local government
communal
fees
public utilities sector
JEL: 
D72
H72
A13
R50
H27
Document Type: 
Working Paper

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