Unpaved Road Ahead: The Consequences of Election Cycles for Capital Expenditures

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Authors Jan Henryk Pierskalla, Audrey Sacks
Journal/Conference Name THE JOURNAL OF POLITICS
Paper Category
Paper Abstract Canonical political budget cycle theories predict an increase in visible government expenditures in election years due to signaling by incumbents. We identify the presence of an alternative election-related distortion of government budgets—a drop in capital expenditures—that applies in low capacity and weak governance settings. In election years, the increase in scrutiny and distraction of politicians and bureaucrats decreases the ability of governments to facilitate complicated capital investments. We test this argument by exploiting the exogenous phasing in and timing of local direct elections in Indonesian districts and detailed data on local budget compositions to document the existence of meaningful reductions in capital expenditures in election years. This effect is mediated by the status of incumbents. While safe incumbents who are running for reelection can avoid this particular type of distortion, elections with embattled incumbents or without incumbents running for reelection exhibit much strong...
Date of publication 2018
Code Programming Language R
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