Electoral Budget Cycle in General and Local Elections: Supply or Demand-Driven Electoral Budget Deficits?

Abstract

This paper inquires the following research question that “to what extent, do election years have explanatory power to predict central and local governmental administrative units’ budget deficits in electoral districts?” Theoretically, this research’s theoretical part utilizes the electoral budget cycle approach that government party/parties increase(s) budgetary expenditures and decrease(s) taxation before the elections for re-election prospect. This paper’s arguments are twofold. First, classic electoral budget cycle disregards temporal order in elections that between two first-order elections (general elections in parliamentary systems and presidential elections in presidential systems), there are second-order elections (local elections at the district/province/city level in parliamentary systems and legislative elections in presidential systems). Second, the classic electoral budget cycle approach deals with a monolithic conception of the incumbent party in parliamentary democracies such that there is no distinction between single party majoritarian and coalition government. Methodologically, this research employs time-series cross-section data and resorts to fixed-effects model. This paper compiles a new dataset on local government spending-revenue for all Turkish municipalities and special provincial administrations at the district level from Turkish Statistical Institute library’s scanned archive documents and on incumbent candidate and party (re-)election between 1980 and 2007 in general elections. Findings can be compartmentalized into three. Firstly, there are electoral budget cycles in both general and local elections. Secondly, government type matters in electoral budget cycles due to clarity of the fiscal responsibility. Thirdly, there are electoral credit cycles in agriculture and real estate to supplement electoral budget deficits.