National Electoral Cycles in Transfers to Subnational Jurisdictions. Evidence from Argentina

Abstract

The political budget cycle literature studies the periodic fluctuations in governments' fiscal policies induced by the cyclicality of electoral processes, but the effects of elections on the distribution of federal resources among subnational governments has not been thoroughly investigated. This paper inquires into the presence of electoral cycles in federal government transfers, presenting evidence on how the Argentine national government has allocated, since the reestablishment of democracy in 1983, two different types of discretional transfers — cash and in-kind — among the subnational governments. There is an electoral manipulation of total transfers that favors subnational governments that are politically affiliated to the national government; cash transfers show that same pattern. However, in-kind transfers, which are more traceable to the national government than cash transfers, increase in non-affiliated subnational jurisdictions during election years.