Do political budget cycles work? A micro-level investigation of pre-electoral budgeting and its electoral consequences

Abstract

One of the most puzzling empirical patterns in political economy is the disconnect between the regular use of fiscal instruments for re-election purposes by incumbents (otherwise known as political budget cycles) on the one hand and their relative electoral ineffectiveness on the other. This article engages with this puzzle by shifting the analysis from the macro to the micro-level. It shows that when taking into account individual-level heterogeneity in the electoral response, one can gain a more nuanced understanding of the political consequences of pre-electoral budgeting. By relying on a set of multi-level random-effects regressions using data from the Comparative Study of Electoral System surveys, it points to two such sources of heterogeneity: social status and ideology. In particular, higher status individuals are considerably less responsive to pre-electoral deficits, though the effects depend on the composition of fiscal measures. Results for ideology are somewhat less consistent across different operationalizations of ideology as well as model specification.