Conditional Factors of Political Budget Cycles: Economic Development, Media Pressure, and Political Fragmentation

Abstract

This study clarifies the heterogeneity of results in the political budget cycle (PBC) literature by asking which factors are more likely to produce these cycles. Our findings for a sample of 145 Spanish local governments over the period 2005–2013 suggest that governments tend to behave opportunistically when media pressure is low and political fragmentation is high, but they behave ideologically when media pressure and political concentration increase. Economic development also partially explains the differences among partisan PBCs, although we find opportunistic PBCs in both less and more developed municipalities. These findings support Frey and Schneider’s conclusion of no simultaneity of opportunistic and partisan PBCs.

Keywords:

• political behavior
• political budget cycles
• public budgeting
• public finance
• voting

Notes

1 The populations of Soria and Teruel are below 50,000 inhabitants, but they were included in the sample because they are provincial capitals, so they must provide the same public services to citizens than those municipalities with more than 50,000 inhabitants, according to the Local Government Regulatory Law 7/1985, dated April 2, 1985.

2 All local governments have to provide public lighting, cemeteries, waste collection, cleaning of public roads, drinking water supply, sewage services, road access to the municipality, and paving and maintenance of public roads; municipalities with more than 5,000 inhabitants additionally have to deliver public parks, public libraries, and urban waste treatment; municipalities with more than 20,000 inhabitants additionally have to provide civil protection and security, social services and information on social needs for people at risk of social exclusion, firefighting, and sports facilities; and, finally, local governments of municipalities with more than 50,000 inhabitants also have to deliver public transport and urban environment facilities.

3 Remember that fragmentation is represented by a Herfindahl index that takes values between 0 and 1, from the maximum fragmentation to the minimum fragmentation, that is, from the minimum concentration to the maximum concentration. So HC refers to values higher to the median of such an index, representing high concentration (low fragmentation); (1-HC) refers to values lower to the median of such an index, representing low concentration (high fragmentation).

Additional information

Notes on contributors

Beatriz Cuadrado-Ballesteros

Beatriz Cuadrado-Ballesteros, University of Salamanca, Faculty of Business and Economics, Multidisciplinary Institute for Enterprises.

Isabel-María García-Sánchez

Isabel-María García-Sánchez, University of Salamanca, Faculty of Business and Economics, Multidisciplinary Institute for Enterprises.