AbstractsPolitical Science

Essays on political business cycles and institutions

by Logothetis Vassileios

Institution: National and Kapodistrian University of Athens; Εθνικό και Καποδιστριακό Πανεπιστήμιο Αθηνών (ΕΚΠΑ)
Year: 2014
Keywords: Πολιτικό-οικονομικοί κύκλοι; Θεσμοί; Εκλογές; Εφαρμοσμένη οικονομετρία; Political business cycles; Panel data econometrics; Institutions; Elections
Record ID: 1154585
Full text PDF: http://hdl.handle.net/10442/hedi/35578


The aim of this thesis is to contribute to the empirical research that studies the interactions between economics and politics. In democratic regimes the set of economic policies adopted, is decided through elections where various interests either collide or ally in favor of different politico-economic outcomes. The importance of the economy in voter’s decision making process, is identified as a factor that can have distortive effects on incumbents’ behavior before elections as those who are opportunistically driven, have the incentive to manipulate fiscal policy to enhance voters’ well-being and improve their re-election prospects. Α number of studies shows that significant and robust results in favor of this hypothesis exist. This thesis investigates whether there are other instruments and channels, besides fiscal policy, that can be used by opportunistically motivated politicians as instruments to enhance their re-election possibilities. Moreover, we study the institutional aspects upon which the emergence of such opportunistically induced effects is conditioned. In our study we employ econometric techniques in the context of dynamic panel data analysis and the areas under investigation include the level of product market regulation and the degree by which state participates in economic activity through state owned enterprises. These two areas are subject to governments’ decisions and can generate rents for certain parts of the electorate. Additionally, we examine the presence of electoral effects on composite indices that capture broader institutional and legal aspects. Finally, we investigate the existence of politically induced effects at the level of sub-national governmental entities where greater institutional homogeneity can be found. For this, we study for electoral effects on fiscal policy and public hiring for the case of Greek municipalities. Our answers document that evidence of pre-electoral manipulation can be found in the areas under examination with our results depending upon various institutional factors including the ones already identified in the relevant political budget cycles literature and others that we first incorporate in the analysis of political-economic cycles. For the case of Greece’s local governments our evidence reveal the presence of politically induced cycles both in local finances and municipal employment. Ο σκοπός της παρούσας διατριβής είναι το να συνεισφέρει στην εμπειρική έρευνα γύρω από την αλληλεπίδραση οικονομίας και πολιτικής. Η σημασία της οικονομίας στην απόφαση των ψηφοφόρων έχει αναγνωρισθεί ότι αποτελεί έναν παράγονται που δύναται να έχει διαστρεβλωτική ισχύ στην συμπεριφορά των κυβερνώντων πριν τις εκλογές καθώς παρέχει το κίνητρο της επιλογής μέτρων πολιτικής που στοχεύουν στην πρόσκαιρη βελτίωση της οικονομική κατάστασης τμήματος του εκλογικού σώματος έτσι ώστε να βελτιστοποιηθούν οι πιθανότητες επανεκλογής. Μια σειρά εμπειρικών μελετών έχει επιβεβαίωση την ύπαρξης τέτοιων πολιτικό-οικονομικών κύκλων στα δημόσια οικονομικά. Το ερώτημα που προκύπτει είναι το…