Electoral Budget Cycles: The case of the Argentine Provinces

This paper presents subnational evidence of electoraly-motivated changes in the level of public expenditures, budgetary deficits and composition of public expenditures in Argentina. The empirical study is made using a dynamic panel data analysis (GMM) for 22 provinces during period 1985-2001. We find evidence of political cycles in policies around the election date. Results shows that deficits and public expenditures increase in election years. Evidence also suggest that expenditures shift toward more visible public investment and away from current consumption goods.