Re-election Prospects Research Articles

Private Credit Under Political Influence: Evidence from France

Formally independent private banks change their supply of credit tothe corporate sector for the constituencies of contested political incum-bents in order to improve their reelection prospects. In return, politicians grant such banks access to the profitable market for loans to local public entities among their constituencies. We examine French credit registry data for 2007–2017 and find that credit granted to the private sector increases by 9%–14% in the year during which a powerful incumbent faces a contested election. In line with politicians returning the favor,banks that grant more credit to private firms in election years gain market share in the local public entity debt market after the election is held.Thus we establish that, if politicians can control the allocation of rents, then formal independence does not ensure the private sector’s effective independence from politically motivated distortions.

Reverse Regulation? National Political Budget Cycles and the Moderating Power of Transnational Rating Agencies

Regulatory theory assumes that national governments seek to constrain undesirable firm behavior, either through direct governmental oversight, or through oversight delegated to non-governmental organizations. We reverse that assumed relationship with the first study investigating when and how certain for-profit businesses of international scope constrain undesirable national government behavior. We ground our study in transnational regime theory explaining when and how for-profit firms position themselves as private regulators, and political budget cycle theory explaining when national governments are more likely to violate regulatory policies and respond to private regulatory enforcement by these for-profit firms. We document empirical support for our framework through analyses of sovereign credit ratings published by major credit rating agencies (CRAs) and borrowing by 63 national governments holding 111 executive elections from 2001-2011. Governments borrow less excessively during election years when CRAs put them on watch for a sovereign rating downgrade, which hurts re-election prospects in the short term and raises national borrowing costs in the longer run. Our study suggests new avenues of management research investigating when other for-profit firms (e.g., insurance firms) are more likely to constrain undesirable government behavior, and new avenues of public policy research aimed at using for-profit firms to discipline developing country governments (e.g., Cape Verde) trying to maintain responsible fiscal policies as they democratize.

Explaining legislative party switching in advanced and new democracies

The phenomenon of legislative party switching has attracted considerable attention among scholars. Studies show that parties are likely to experience defections if they are unable to offer their legislators electoral, office and policy benefits. While often deemed a symptom of a weakly institutionalized party system, switching may also be frequent in established democracies. Yet, surprisingly, we have no empirical evidence to help us understand whether party benefits that drive switchers are different in established democracies and new democracies. I argue that parties that fail to provide their members with re-election prospects or government access are likely to witness switching only in new democracies. In advanced democracies, switching is likely to be associated with ideological identity and policy motives. The statistical analysis of party switching across 25 European advanced and post-communist democracies confirms my expectations.

Arizona: #RedforEd -- Governor Ducey Forced to Invest in Education

The FY2019 budget saw the country’s largest movement of teachers descend on the state capital and force Governor Doug Ducey to scramble to save his re-election prospects. Gradually growing through social media, the #RedforEd movement culminated with 50,000 teachers and supporters walking out of classrooms and descending onto the Capitol grounds. Gov. Ducey deftly rose to the occasion from his initial one percent raise to a 20 percent raise by FY2021 before the walkout commenced, moving the pressure to legislators to seal the deal, which they did on May 3, 2018. Stronger revenue growth than prior years enabled the governor and Legislature to find the necessary funds.

Private Credit Under Political Influence: Evidence from France

Formally independent private banks change their supply of credit to the corporate sector for the constituencies of contested political incumbents in order to improve their reelection prospects. In return, politicians grant such banks access to the profitable market for loans to local public entities among their constituencies. We examine French credit registry data for 2007--2017 and find that credit granted to the private sector increases by 9%--14% in the year during which a powerful incumbent faces a contested election. In line with politicians returning the favor, banks that grant more credit to private firms in election years gain market share in the local public entity debt market after the election is held. Thus we establish that, if politicians can control the allocation of rents, then formal independence does not ensure the private sector's effective independence from politically motivated distortions.

Political Business Cycles in Australia Elections and Party Ideology

AbstractParty ideology, elections and economic performance can have a significant impact on the overall economic performance. Governments are formed by parties that compete at elections and, based on their ideology, have different preferences regarding the size and scope of government. With respect to economic policy, left-wing parties advocate for government intervention in order to ease the effects of the business cycle whilst right-wing parties favour market solutions as a response to economic fluctuations. According to the partisan theory, left-wing parties are more willing to adopt expansionary fiscal and monetary policies when in government, as they are mainly concerned with employment. On the opposite side, right-wing parties prioritize inflation and fiscal discipline as objectives. Both left-wing and right-wing parties understand the impact that the economy has on their re-election prospects. When in government, in order to maximize their probability of being re-elected, all parties will try and make voters believe that their economic policies were successful. How the electorate will react to this behaviour depends on its ability to understand and predict the impact of current policies on future welfare. In this paper we examine the influence of government ideology and elections on the economy. Using quarterly data for government consumption, money supply, taxation and welfare expenditure, we find that both partisan and opportunistic political cycles characterize Australian politics thus confirming the insights put forward by Nordhaus, W.D. (1975. “The Political Business Cycle.”The Review of Economic Studies42 (2): 169–190.) and Hibbs, D. (1977. “Political Parties and Macroeconomic Policy.”The American Political Science Review7: 1467–1487).

Friends in High Places: An Examination of Politically Connected Governments

This paper examines the consequences of powerful political connections for local governments. We find that governments located within the constituencies of, and thus connected to, powerful congressional members reduce their stewardship over public resources. Using plausibly-exogenous declines in the power of congressional representation, we show that the effect is causal. To better understand why connected local governments can reduce stewardship, we study electoral characteristics. Our findings suggest that the increased resources that come with powerful congressional representation allow local-government officials to reduce stewardship without material adverse effects on their reelection prospects. In sum, our findings provide evidence of a cost of political connections: they weaken local governments' incentives to act in a socially optimal manner.

Resource Windfalls and Public Debt: The Role of Political Myopia

Can natural resource windfalls increase public debt in democracies? Adopting a political economy perspective, we show that the answer is in the affirmative. Resource windfalls increase both the government's income and wealth. The former mitigates the need to borrow, whereas the latter encourages further borrowing (as it improves its terms), implying an ambiguous pure effect of resource windfalls on debt. Re-election considerations shorten political time horizons and give rise to political myopia. We show that higher political myopia, induced by more stringent (institutional) re-election restrictions, magnifies the wealth effect, turning positive the effect of resource windfalls on debt. We test the model's predictions using a panel of U.S. states over the period 1963-2007. Our identification strategy rests on constitutionally-entrenched differences in gubernatorial term limits that provide plausibly exogenous variation in re-election prospects, and geographically-based cross-state differences in natural endowments. Our baseline estimates indicate that a resource windfall of $1 induces an increase of approximately $0.2 in the public debt of states with more stringent re-election restrictions.

Measuring re-election prospects across electoral systems: a general approach applied to Germany

This research note presents a general approach for measuring the electoral safety of individual MPs across electoral systems that is based on predicted re-election probabilities estimated from multilevel logistic regression models. In contrast to existing measures, this method yields estimates on an intuitive and readily comparable probability scale, captures the higher sensitivity of re-election prospects to electoral change in the range of close races, and can accommodate regional differences in context conditions such as volatility. The paper implements the approach for two archetypical electoral systems – first-past-the-post (FPTP) systems and closed-list proportional representation (PR) – and estimates re-election prospects for the FPTP and PR tiers of the German mixed electoral system in all Bundestag elections since 1957. While the empirical data presented here is mainly illustrative, the concluding section highlights various questions that future research can address with the new measure.

Political Myopia, Public Debt, and Economic Growth

In this work we examine how economic growth affects public debt when interacted with reelection prospects. Reelection considerations shorten political time horizons and give rise to political myopia that exacerbates debt accumulation. That laxer institutional reelection restrictions (e.g. no term limits) mitigate this effect is well known. Incorporating growth, we find that this mitigation can be reversed because less myopic incumbents put more emphasis on smoothing the effects of growth across generations. We test these predictions using a panel of U.S. states over the period 1963-2007. Our identification strategy rests on constitutionally-entrenched differences in gubernatorial term limits that provide plausibly exogenous variation in reelection prospects, and aggregate national TFP shocks that are exogenous to individual states. Our more conservative estimates indicate that over a course of five years, a one standard deviation positive TFP shock induces a relative increase of approximately $312 in the real per capita public debt of states with laxer institutional reelection restrictions.

Electoral Cycles in Savings Bank Lending

We provide evidence that German savings banks, which are controlled by county-level politicians, systematically adjust lending policies in response to local electoral cycles. The different timings of county elections across states and the existence of a comparable group of cooperative banks-that are very similar to savings banks but lack their political connectedness-allow for identification of the effects of county elections on savings bank lending. These effects are economically meaningful and very robust to various specifications. We find that election-induced lending negatively impacts savings bank profitability and is associated with an increase in credit defaults roughly three years after an election. Examining the political-economy aspects of our findings, we provide evidence that savings bank excess lending and public spending at the county level are substitute levers for county politicians. Finally, we find indications that subpar pre-election economic county performance hurts re-election prospects and increases the intensity of lending cycles.

Constituency Pressures on Committee Selection: Evidence from the Northern Ireland Assembly and Dáil Éireann

Most previous research examining selection to committees assumes constituency pressures—leading representatives to seek committee assignments dealing with their constituents’ particularistic interests that improve their re-election prospects—are incompatible with disciplined parties, which may prevent such personal vote-seeking behaviour in order to preserve the party’s brand. In contrast, we argue parties will support committee assignments promoting members’ re-election chances because parties benefit from their members’ re-election. Analysing two legislatures with highly disciplined parties and electoral systems encouraging personal vote-seeking—the Northern Ireland Assembly and Dail Eireann—our analysis suggests constituency pressures increase the chances of selection to committees enhancing members’ re-election prospects.

Election proximity and representation focus in party-constrained environments

Do elected representatives have a time-constant representation focus or do they adapt their focus depending on election proximity? In this article, we examine these overlooked theoretical and empirical puzzles by looking at how reelection-seeking actors adapt their legislative behavior according to the electoral cycle. In parliamentary democracies, representatives need to serve two competing principals: their party and their district. Our analysis hinges on how representatives make a strategic use of parliamentary written questions in a highly party-constrained institutional context to heighten their reselection and reelection prospects. Using an original data set of over 32,000 parliamentary questions tabled by Portuguese representatives from 2005 to 2015, we examine how time interacts with two key explanatory elements: electoral vulnerability and party size. Results show that representation focus is not static over time and, in addition, that electoral vulnerability and party size shape strategic use of parliamentary questions.

Executive-Legislative Conflict and Regulation Outcomes: The Case of the U.S. FCC

In the context of regulatory decisions, the political conflict between executive and legislative branches has been significant. The relative ideological stances and power resources of federal agencies and Congress determines regulation outcomes. In particular, when agencies earn sufficient political support from policy stakeholders by relying on procedural justice, they are able to secure the regulatory outcomes they desire without congressional intervention. Because legislators are highly concerned about their reelection prospects, policy stakeholders` political support is an important power resource for agencies. Legislators are likely to embrace regulatory decisions made by agencies supported by policy stakeholders even if they disregard congressional preferences. This article provides evidence for this proposition by reviewing media concentration regulation policies of the U.S. Federal Communications Commission.

Patronage or Signaling: How Mayors Use City Payroll to Stay in Office

Abstract Several studies on municipal hiring decisions have indicated that when a city’s payroll grows, its mayor’s re-election prospects are likely to improve. It is not clear, however, if such an effect is attributable to patronage-driven, or signaling-driven, behavior of the incumbents. The difference is important: patronage leads to inefficient public administration, while signaling can produce political business cycles. In this paper, I propose some key electoral implications of patronage-driven and signaling-driven hiring, and verify them with data on local elections in Bulgaria (2015 and 2011) and in Poland (2014). I find that a large municipal workforce has a negative overall effect on mayors’ re-election. Importantly, the impact of city payroll varies with incumbents’ partisanship (strongly negative for mayors representing the economic right, neutral for independent mayors, positive for ex-communist mayors) and does not depend on the duration of incumbent’s tenure. These findings strongly support the patronage-driven explanation of Eastern Europe’s local political economy.

Fiscal redistribution around elections when democracy is not “the only game in town”

This paper seeks to examine the implications of policy intervention around elections on income inequality and fiscal redistribution. We first develop a simplified theoretical framework that allows us to examine election-cycle fiscal redistribution programs in the presence of a revolutionary threat from some groups of agents, i.e., when democracy is not “the only game in town”. According to our theoretical analysis, when democracy is not “the only game in town”, incumbents implement redistributive policies not only as a means of improving their reelection prospects, but also in order to signal that “democracy works”, thereby preventing a reversion to an autocratic status quo ante at a time of the current regime’s extreme vulnerability. Subsequently, focusing on 65 developed and developing countries over the 1975–2010 period, we report robust empirical evidence of pre-electoral budgetary manipulation in new democracies. Consistent with our theory, this finding is driven by political instability that induces incumbents to redistribute income—through tax and spending policies—in a relatively broader coalition of voters with the aim of consolidating the vulnerable newly established democratic regime.

Electoral Consequences of Lawmaking Activities for State Legislative Incumbents*

ObjectiveDo incumbent state legislators who introduce many bills or have high passage rates for their proposals receive an electoral benefit for these efforts? If so, where is such an electoral advantage manifested? Is it a direct effect whereby voters are more likely to recognize and reward a legislator's productivity? Or is the effect more indirect whereby potential candidates are less likely to challenge an active incumbent?MethodsThese questions are addressed in an analysis of legislative elections in 18 states over two election cycles.ResultsWithin the low‐information environment of state legislative elections, there is evidence of both direct and indirect effects of lawmaking activities. Higher rates of bill passage decrease the likelihood that incumbents are challenged in primaries. Bill passage also reduces the likelihood they face well‐financed opponents in the general election. Incumbents who introduce more legislation ultimately receive larger vote shares in general elections.ConclusionsIntroducing and passing legislation can enhance an incumbent's prospects for reelection.

Political budget cycles and reelection prospects in Greece's municipalities

This paper considers the presence of political budget cycles in Greece's municipalities. We construct a new dataset from primary sources and we find strong evidence of pre-electoral manipulation through increased expenditures and excessive borrowing. We use a dynamic panel data approach producing evidence of opportunistic behavior in local government finances. Our results are robust in the face of a series of controls including mayors running for reelection, their political alignment with the central government, and prolonged terms. Moreover, the results are robust to the exclusion of small sized municipalities and to the restriction of the time range of our investigation to the post-Maastricht period. We also consider whether opportunistic policies influence incumbents' reelection prospects finding that increased expenditures and election year opportunistic excesses are electorally rewarding. Our findings provide a characterization of opportunistic public finance management in Greek municipalities where electorally motivated budgetary decisions appear impervious to the various municipal reform attempts.

Personalised parliamentary behaviour without electoral incentives: the case of the Netherlands

Most theories of legislative behaviour explain the behaviour of MPs through electoral incentives. However, they fail to explain variation in parliamentary activity when individual electoral incentives are largely absent. This article studies MPs’ activity in such a parliament: the Dutch Tweede Kamer. It examines four clusters of incentives that may drive parliamentarians to be active. Party and committee environments provide the best explanation for the level of activity of individual MPs. Reselection and promotion prospects explain MPs’ behaviour, but only under more particular specifications. Re-election prospects were not found to affect activity levels.

Public investment and reelection prospects in developed countries

A growing body of literature suggests that office‐motivated politicians manipulate fiscal policy instruments to enhance their reelection prospects. This article directly examines the impact of fiscal policy on incumbents’ reelection prospects by focusing on the impact of public investment. This impact is estimated using a panel of 20 countries belonging in Organisation for Economic Co‐operation and Development over the period 1972–1999. We find that the level of public investment in the earlier years of an incumbent's term in office improves their reelection prospects, whereas election year manipulation of public investment is neither rewarded nor punished. Our evidence also suggests that, after controlling for the level of deficit and public investment, the level of government revenue both in the election and nonelection years does not seem to affect reelection prospects. Moreover, we find that deficit creation during elections and in nonelection years are not rewarded by voters.