Are there Political Budget Cycles in the Euro Area?

Mark Mink (1) , Jakob de Haan (1)

1 University of Groningen [Groningen]

This article examines whether there is a political budget cycle (PBC) in countries in the euro area. Using a multivari ate model for 1999–2004 and various election indicators we find strong evidence that, since the start of the Stability and Growth Pact, fiscal policy-makers in the euro area have pursued expansionary policies before elections. In an elec tion year – but not in the year prior to the election – the budget deficit increases. This result is in line with third-generation PBC models, which are based on moral hazard. We also find a significant but small partisan effect on fiscal policy outcomes.

Mots clés: fiscal policy; political budget cycle; Stability and Growth Pact

Mark Mink, Jakob de Haan. Are there Political Budget Cycles in the Euro Area?. European Union Politics, 2006, 7 (2), pp.191-211. ⟨10.1177/1465116506063706⟩. ⟨hal-00571724⟩