The effects of fiscal autonomy on the size of public sector and the strength of political budget cycles in local expenditureReport as inadecuate




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Abstract

We analyze the effects of political business cycles and fiscal autonomy on the expenditure categories of Polish municipalities. Using System GMM technique, we find convincing evidence for strong political business cycles in almost all expenditure categories, and in particular for the categories of expenditure relevant for electoral success such as infrastructure and social expenditure. Transfers to municipalities from the central government accentuate the strength of the electoral cycles, but surprisingly are associated with lower expenditure levels outside of the election periods. The latter results are the main finding: fiscal autonomy although not necessarily reducing the levels of local expenditure, does reduce the level of political manipulation of the budgets.



Item Type: MPRA Paper -

Original Title: The effects of fiscal autonomy on the size of public sector and the strength of political budget cycles in local expenditure-

Language: English-

Keywords: local expenditure, political business cycles, fiscal autonomy, decentralization-

Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting BehaviorH - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H72 - State and Local Budget and ExpendituresH - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H75 - State and Local Government: Health ; Education ; Welfare ; Public PensionsH - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession-





Author: Kppl Turyna, Monika

Source: https://mpra.ub.uni-muenchen.de/66877/







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