Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84238
Authors: 
Saporiti, Alejandro
Streb, Jorge M.
Year of Publication: 
2003
Series/Report no.: 
Serie Documentos de Trabajo, Universidad del CEMA: Área: economía ciencia política 251
Abstract: 
From a theoretical viewpoint, political budget cycles (PBC) arise in equilibrium when rational voters are imperfectly informed about the incumbent's competency and the incumbent enjoys discretionary power over the budget. This paper focuses on the second condition, examining how executive discretion is affected by the budgetary process under separation of powers. We specifically model PBC in the composition of government spending. The main result is that effective checks and balances in the budgetary process curb PBC. The institutional features of the executive-legislature bargaining game, namely, the actual agenda-setting authority, the status quo location and the degree of legislative oversight and control of the implementation of the budgetary law, play critical roles for the existence and the size of PBC. These results are consistent with recent empirical findings, which show that PBC are more pronounced in developing countries, where there are also less effective checks and balances.
Subjects: 
rational political budget cycles
budget composition
separation of powers
checks and balances
budgetary process
JEL: 
D72
D78
Document Type: 
Working Paper

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