Promises, Promises: Vote-buying, Institutionalized Political Parties and Political Budget Cycles

Marek Hanusch (Overseas Development Institute)
Philip Keefer (The World Bank Development Research Group)

Abstract: This paper advances and tests a novel explanation for both vote-buying and political budget cycles. The former occurs because politicians cannot make credible commitments to voters regarding future policies and, instead, use pre-electoral transfers to mobilize electoral support. Such transfers trigger political budget cycles: they are often large in the aggregate, underwritten by government resources, and are rationally concentrated in the period just before elections are held. We use three proxies for the ability of politicians to make credible commitments to voters: the average age of all parties and the age of the government party at the time the current leader took office; and average country responses to a World Values Survey question asking about respondents’ confidence in political parties. Using any of these variables, political budget cycles are significantly larger in countries where politicians are less able to make credible commitments.

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