![Sample our Politics & International Relations journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/5947/TOC-Subject-Sample-2021-Politics-International-Relations.jpg"})
Abstract
Governments’ use of debt as a political instrument has been widely studied from the perspective of partisan and electoral cycles, mainly concerning central government. On the whole, previous studies have attempted to determine the effects of political ideology and the proximity of elections on the opportunistic use of public spending. The current study aims to broaden the scope of attention to the effect of partisan and electoral cycles on debt, by means of a broader consideration of the motives that lead politicians to take on a deficit and that are usually linked to the associated electoral risk. More particularly, we examine whether, during the electoral period, greater confidence in re-election can modify party behaviour concerning the use of public spending, and if so, whether the change is greater or smaller depending on the ruling party’s ideology. The results obtained show that local administrations need to incur debt, although politicians take on more liability than is appropriate to their demographic and economic characteristics, especially in an election year. It was also found that political stability favours a reduction in the public deficit, a pattern that is maintained in electoral periods. This effect was found to be independent of the partisan cycle.
Notes
1. Both models claim that low levels of competition create inefficient political outcomes, because politicians maximise electoral rents from being in office proportionally to the level of public spending (the Leviathan model) or from setting out their ideological preferences (the Partisan model). The Leviathan model, associated with Brennan and Buchanan (Citation1980), assumes that politicians, regardless of their ideology, have incentives to increase the size of the public sector through higher taxes and a higher level of public spending, as this policy can directly increase the electoral rents for the ruling party. However, these practices should not be undertaken if they would increase the probability of losing votes. In this sense, if the level of political competition is sufficiently high, the party’s rents will be driven towards zero (Persson and Tabellini Citation2000). In the Partisan model, politicians and political parties receive rents from enacted partisan policy (Hibbs Citation1977, Tufte Citation1978). Consequently, left-wing governments receive positive rents from increased spending, whereas right-wing ones receive positive rents from decreased spending. In this case, a higher degree of competition leaves less room for the winning party to impose its preferred partisan policy (Persson and Tabellini Citation2000).
2. In Spain, there is an intermediate level between regions and municipalities, namely the provinces. Each province groups several municipalities. Bordering provinces with common cultural and economic characteristics, the islands and the provinces with a common history can achieve a degree of self-government and form regions (art. 143, Spanish Constitution). Each region (autonomous community) usually includes several provinces, although it can be formed by a single province. The African towns of Ceuta and Melilla are municipalities and regions, simultaneously; they are called Autonomous Cities, instead of Autonomous Communities.
3. Specifically, according to FEMP (2006), the current spending of City Halls has increased due to sub-functions and management areas initially conferred on the regions. The survey undertaken in this study stresses that these areas and sub-functions have accumulated spending on non-compulsory services and activities.
Additional information
Notes on contributors
José-manuel Prado-Lorenzo
José-Manuel Prado-Lorenzo is Professor of Accounting at the University of Salamanca, Spain. His research focuses on the public and private sectors, including public sector reforms, corporate governance and corporate social responsibility. His work has been published in journals including the Polish Journal of Environmental Studies, Sustainable Development and the Journal of Productivity Analysis.
Isabel-maría García-Sánchez
Isabel-María García-Sánchez is a lecturer in accounting at the University of Salamanca, Spain. Her research focuses on public sector reforms, especially accountability and transparency in local public services; the private sector, corporate governance and corporate social responsibility. Her work has been published in journals, such as Central European Journal of Operations Research, Government Information Quarterly and Corporate Social Responsibility and Environmental Management.
Beatriz Cuadrado-Ballesteros
Beatriz Cuadrado-Ballesteros is Associate Professor of Accounting at the University of Salamanca, Spain. Her research focuses on public sector reforms, particularly the role of efficiency and informative transparency in local public services, accountability and citizens’ quality of life. Her work has been published in journals including International Review of Administrative Sciences, International Public Management Journal and Journal of Cleaner Production.