Acta Univ. Agric. Silvic. Mendelianae Brun. 2016, 64(2), 595-601 | DOI: 10.11118/actaun201664020595

Political Budget Cycles in the European Union

Jiří Gregor

Department of Economy, Faculty of Economics, VŠB-Technical University of Ostrava, 17. listopadu 15/2172, 708 33 Ostrava-Poruba, Czech Republic

This paper provides research on the theme of the political budget cycles. The goal is to find out whether or not the government tries to manipulate the state budget and its components for the purpose of re-election across the countries of the European Union. In order to verify this theory a dynamic panel data model was used. The results were significant, but only if predetermined elections were not counted into the estimations. In that case, the theory of the political budget cycles could be accepted as valid for the EU countries. The main driving force of the political budget cycles across the countries of the European Union is fluctuation of the government expenditures. During the election year, the government expenditures are higher, and a year after the election, government expenditures are lower. This is reflected into the state budget balance.

Keywords: political budget cycles, government expenditures, government revenues, elections, GDP growth, dynamic panel model, generalized method of moments, European Union

Grants and funding:

This contribution was created under the terms of the project SGS VŠB-TUO SP2015/115 -Institutional and Monetary Context of Economic Integration of European Countries Today.

Prepublished online: May 4, 2016; Published: May 1, 2016  Show citation