This paper studies the optimal design of fiscal limits in the context of a simple political economy model. The model features a single politician and a representative voter. The politician is responsible for choosing the level of public spending for the voter but may be biased in favor of...

We investigate political budget cycles in China. To do so, we exploit cross-province variation in the timing of the Congress of the Communist Party, the most significant event in terms of promoting and re-appointing prefecture leaders. We find strong evidence of a cycle, with an acceleration in...

"This paper presents a political economy theory of the behavior of fiscal policy over the business cycle. The theory predicts that, in both booms and recessions, fiscal policies are set so that the marginal cost of public funds obeys a submartingale. In the short run, fiscal policy can be...