Political Equality and Budget Cycles: GMM Analysis for OECD Countries

Yıl 2025, Cilt: 9 Sayı: 4, 1786 - 1796, 23.12.2025

Şehit Muksit Kaya

https://doi.org/10.30586/pek.1776515

Öz

The shaping of fiscal policies by political motives during election periods poses a significant challenge to budgetary discipline and macroeconomic stability in democratic countries. The existence and magnitude of this phenomenon, referred to as Political Budget Cycles (PBCs) in the literature, vary depending on the institutional quality of countries. This study examines the conditional role of political inequality in the emergence of PBCs within the context of Organisation for Economic Co-Operation and Development (OECD) countries. To this end, data from 38 OECD countries for the period 2004–2022 are analyzed using the Generalized Method of Moments (GMM), which accounts for endogeneity issues. Empirical findings reveal that political equality is a critical condition for the presence of PBCs: in countries with low political equality, budget balances deteriorate during election years. In contrast, in countries with high political equality, elections do not have a statistically significant effect on budget balances. These results indicate that political inequality is a key determinant of fiscal policy preferences during election periods and that institutional reforms strengthening political equality can also enhance fiscal discipline. The findings suggest that ensuring fiscal discipline during elections goes beyond applying technical fiscal rules.

Anahtar Kelimeler

Political Budget Cycles , Political Inequality , Fiscal Policy , Elections

Politik Eşitlik ve Bütçe Döngüleri: OECD Ülkeleri İçin GMM Analizi

Öz

Seçim dönemlerinde uygulanan maliye politikalarının politik gerekçelerle şekillendirilmesi demokratik ülkelerde mali disiplinin sağlanması açısından önemli bir sorun teşkil etmektedir. Politik Bütçe Döngüleri (PBD) olarak adlandırılan bu olgunun varlığı ve şiddeti ülkelerin kurumsal kalitesine göre farklılık göstermektedir. Bu çalışmada PBD’lerin ortaya çıkmasında politik eşitliğin oynadığı rol Ekonomik İşbirliği ve Kalkınma Örgütü (OECD) ülkeleri bağlamında ele alınmaktadır. 38 OECD ülkesinin 2004-2022 dönemi arasındaki yıllık verileri Genelleştirilmiş Momentler Modeli (GMM) yöntemiyle analiz edilmektedir. Ampirik bulgulara göre politik eşitsizliğin PBD’lerin varlığı için kritik bir koşul olduğu ortaya koyulmaktadır. Politik eşitliğin düşük olduğu ülkelerde seçim dönemlerinde bütçe dengesinin bozulduğu ve dolayısıyla mali disiplinin olumsuz etkilendiği tespit edilmiştir. Bu sonuçların yanında politik eşitliğin yüksek olduğu ülkelerde seçim dönemlerinin bütçe dengesi üzerinde istatistiksel olarak anlamlı bir etkisi bulunamamıştır. Ampirik sonuçlara göre ülkelerin kurumsal dinamikleri kamu mali yönetimini ve dolayısıyla mali disiplini belirleyen unsurlar arasında kabul edilebilir. Bu bulgular sonucunda politik eşitliği güçlendiren kurumsal reformların aynı zamanda mali disiplini de sağlayabileceği ortaya koyulmaktadır.

Anahtar Kelimeler

Politik Bütçe Döngüleri , Politik Eşitlik , Maliye Politikası , Seçimler

Kaynakça

• Acemoglu, D., & Robinson, J. A. (2006). De facto political power and institutional persistence. American Economic Review, 96(2), 325–330.
• Adman, P. (2011). Investigating political equality: The example of gender and political participation in Sweden. Acta Politica, 46(4), 380–399.
• Alesina, A., & Tabellini, G. (1988). Voting on the budget deficit (Working Paper No. 2759). National Bureau of Economic Research.
• Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277–297.
• Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51.
• Beramendi, P., Besley, T., & Levi, M. (2022). Political equality: What is it and why does it matter? Inequality: The IFS Deaton Review. https://ifs.org.uk/inequality/political-equality-what-is-it-and-why-does-it-matter
• Block, S. A. (2001). Elections, electoral competitiveness, and political budget cycles in developing countries (CID Working Paper No. 78). Center for International Development, Harvard University.
• Blundell, R., & Bond, S. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics, 87(1), 115–143.
• Bonfatti, A., & Forni, L. (2019). Fiscal rules to tame the political budget cycle. European Journal of Political Economy, 60, Article 101805.
• Brender, A., & Drazen, A. (2008). How do budget deficits and economic growth affect reelection prospects? Evidence from a large panel of countries. American Economic Review, 98(5), 2203–2220.
• Castro, V., & Martins, R. (2019). Political and institutional determinants of credit booms. Oxford Bulletin of Economics and Statistics, 81(5), 1144–1178.
• Catrina, I. L. (2014). Budget constraints and political behavior in democracy. Procedia Economics and Finance, 15, 214–220.
• Drazen, A., & Eslava, M. (2010). Electoral manipulation via voter-friendly spending: Theory and evidence. Journal of Development Economics, 92(1), 39–52.
• Election Guide. (2024). 20 3 2024. <https://www.electionguide.org/>
• Ezcurra, R., & Zuazu, I. (2022). Political equality and quality of government. Kyklos, 75(2), 269–293.
• Franchino, F. (2024). International oversight of fiscal discipline. European Journal of Political Research, 63(1), 281–302.
• Garcia, I., & Hayo, B. (2020). Political budget cycles revisited: Testing the signalling process (MAGKS Joint Discussion Paper No. 14). Marburg Centre for Institutional Economics.
• Hemming, R. (2003). Policies to promote fiscal discipline. IMF Fiscal Affairs Department, 1–19.
• Hibbs, D. A. (1977). Political parties and macroeconomic policy. American Political Science Review, 71(4), 1467–1487.
• Hong, C. (2019). Political equality, Confucian meritocracy, and citizenly participation: A reflection. Journal of Chinese Philosophy, 46(1–2), 119–141.
• IMF. IMF Datasets. 2025. 12 06 2025. <https://data.imf.org/en>.
• Ješić, M., & Praščević, A. (2023). Voters’ awareness as a determinant of political budget cycles: Evidence from selected European economies. Finance a Úvěr: Czech Journal of Economics & Finance, 73(2).
• Katsimi, M., & Sarantides, V. (2012). Do elections affect the composition of fiscal policy in developed, established democracies? Public Choice, 151(1–2), 325–362.
• Klein, F. A., & Sakurai, S. N. (2015). Term limits and political budget cycles at the local level: Evidence from a young democracy. European Journal of Political Economy, 37, 21–36.
• Lewis, B. D. (2018). Local government form in Indonesia: Tax, expenditure, and efficiency effects. Studies in Comparative International Development, 53(1), 25–46.
• Lindbeck, A. (1976). Stabilization policy in open economies with endogenous politicians. American Economic Review, 66(2), 1–19.
• Nguyen, T. C., & Tran, T. L. (2023). The political budget cycles in emerging and developing countries. Journal of Economics and Development, 25(3), 205–225.
• Nordhaus, W. D. (1975). The political business cycle. The Review of Economic Studies, 42(2), 169–190.
• Onur, S. (2003). Politik Bütçe Döngüleri Bağlamında İç ve Dış Borçlanmanın Devlet Bütçesi Üzerindeki Etkisi. ISGUC The Journal of Industrial Relations and Human Resources, 5(2).
• Peltzman, S. (1992). Voters as fiscal conservatives. The Quarterly Journal of Economics, 107(2), 327–361.
• Rogoff, K. (1990). Equilibrium political budget cycles. American Economic Review, 80(1), 21–36.
• Rogoff, K., & Sibert, A. (1988). Elections and macroeconomic policy cycles. The Review of Economic Studies, 55(1), 1–16.
• Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. The Stata Journal, 9(1), 86–136.
• Scartascini, Carlos, Cesi Cruz ve Philip Keefer. «The Database of Political Institutions (DPI): 2020.» 2021. IDB Open Data.
• Schneider, C. J. (2010). Fighting with one hand tied behind the back: Political budget cycles in the West German states. Public Choice, 142(1–2), 125–150.
• Sezgin, Ş., & Sezgin, S. (2017). Politik bütçe döngüleri ve Türkiye’de seçimler. Journal of Life Economics, 4(2), 17-34.
• Shi, M., & Svensson, J. (2006). Political budget cycles: Do they differ across countries and why? Journal of Public Economics, 90(8–9), 1367–1389.
• Skaaning, S.-E., & Hudson, A. (2025). The global state of democracy indices methodology: Conceptualization and measurement framework, Version 9. International IDEA.
• Tempelman, J. H. (2007). James M. Buchanan on public-debt finance. The Independent Review, 11(3), 435–449.
• Tufte, E. R. (1975). Determinants of the outcomes of midterm congressional elections. American Political Science Review, 69(3), 812–826.
• Veiga, L. G., & Veiga, F. J. (2007). Political business cycles at the municipal level. Public Choice, 131(1–2), 45–64.
• Verba, S. (1996). The citizen as respondent: Sample surveys and American democracy presidential address, American Political Science Association, 1995. American Political Science Review, 90(1), 1–7.
• Wall, S. (2007). Democracy and equality. The Philosophical Quarterly, 57(228), 416–438.
• World Bank. World Bank Open Data. 2025. 21 05 2025. <https://data.worldbank.org/>.