Legislative Political Budget Cycles

Cameron A. Shelton (Claremont McKenna College)

Abstract: Recent literature suggests that opportunistic political budget cycles are a phenomenon of new rather than established democracies. The literature also suggests that this cannot be explained as the result of naïve voters because voters in new democracies are just as likely to punish executives for deficits as are voters in established democracies (Brender and Drazen 2008). This leaves two puzzles: why do these cycles exist at all? And what part of the democratization process explains this amelioration? We suggest that the answers to both puzzles lie in the system of accountability. The budget process is a legislative phenomenon and the manner in which voters hold their representatives accountable is a function of the informal institutions that govern political competition. We develop a class of models to show that political budget cycles are possible in the legislative context. We further show that the development of a strong party system can dampen these legislative budget cycles. In sum, political budget cycles are a legislative phenomenon and institutionalization of the legislature limits the scope of this form of electioneering.


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