The effects of fiscal decentralisation on the strength of political budget cycles in local expenditure

Abstract

ABSTRACTIn this article we analyse the effects of political business cycles and fiscal decentralisation on the expenditure categories of Polish municipalities. We find convincing evidence demonstrating the impact of strong political business cycles in almost all expenditure categories, particularly for the categories of expenditure relevant to electoral success, such as infrastructure and social programmes. We find evidence that transfers to municipalities increase the strength of the electoral cycle.