Cycles in a cycle: investment expenditures and their composition during the political budgetary cycle

ABSTRACT

Previous studies on the Political Budgetary Cycle have used fiscal variables on high levels of aggregation, including, among others, investment expenditure aggregates or capital expenditure aggregates. This article demonstrates the existence of a Political Budgetary Cycle in investment expenditures among Polish local governments, and analyses the composition of investment expenditures during the cycle. Due to the varying visibility of investment expenditures, their composition is also subject to fluctuations. Before elections, there is an increase in investments in culture, tourism and transport infrastructure, and a drop in investments in public safety, education, environmental protection, sports and counteracting social exclusion.

KEYWORDS:

• Local political budgetary cycle
• investment composition

Acknowledgments

The author would like to thank Witold Jaśkiewicz, Tomasz Jędrzejowicz, Maciej Pomykała, Marcin Roter and two anonymous reviewers for their useful comments and other help in improving the article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Łukasz Wiktor Olejnik

Łukasz Wiktor Olejnik is a PhD student in the Department of Economics II at SGH Warsaw School of Economics and an Economist at the National Bank of Poland. His research interests cover public finance, fiscal policy, macro-economics and applied econometrics.