DEV Working Paper 281: Revisiting Political Budget Cycles in Latin America
What is the impact of elections on fiscal policy in Latin American economies in comparison to OECD countries over the period 1990-2006? In Latin American countries, the average primary balance declines by an amount close to 0.7 % of GDP during an election year, confirming the hypothesis of fiscal deteriorations during the election cycle. Most of this movement is due to the expenditure component and within this it is current (close to 0.8 % of GDP) rather than capital expenditure that is most affected. By contrast, in OECD countries, the observed changes in the primary balance and current expenditures during election years are minimal.
Long abstract
