Political Cycles in a Developing Economy : Effect of Elections in Indian States

The author studies the effect of state legislative assembly elections, on the policies of state governments in 14 major states of India, from 1960 to 1996. She identifies the effect of the timing of elections using an instrument for the electoral cycle that distinguishes between constitutionally sch...

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Main Author:	Khemani, Stuti
Format:	Publications & Research
Language:	en_US
Published:	World Bank, Washington, DC 2015
Subjects:	Political factors State politics Election statistics State governments Constitutional guarantees Policy making Fiscal policy Public service delivery Voting status Information analysis Commodity taxation Investments Deficits Road construction accounting authority borrowing budget deficit budget deficits campaign central government central government budgets central taxes civil servants coalition governments coalitions communist communist parties Congressional elections constituencies constituents constitution constitutional arrangements councils democracies democracy democratic systems economic policies election electioneering electoral competition electorate expenditure federal government Financial support fiscal fiscal policies fiscal policy freedom general elections government consumption government employees government management government policies government policy Human Resources income taxes inflation left-wing legislative assemblies levels of government lower house macroeconomic conditions national elections national governments national level Parliament party affiliation Political affiliation political business cycle political economy political institutions political parties political patronage politicians popular participation presidential elections property taxes public debt Public Economics public finance public policy public service public service delivery public services public works roads sales taxes state budget state elections state funds state government state income suffrage tax tax collection tax collections tax cuts tax revenue tax revenues voter turnout voters water supply
Online Access:	http://hdl.handle.net/10986/21330

id	okr-10986-21330
recordtype	oai_dc
spelling	okr-10986-213302021-04-23T14:04:01Z Political Cycles in a Developing Economy : Effect of Elections in Indian States Khemani, Stuti Political factors State politics Election statistics State governments Constitutional guarantees Policy making Fiscal policy Public service delivery Voting status Information analysis Commodity taxation Investments Deficits Road construction accounting authority borrowing budget deficit budget deficits campaign central government central government budgets central taxes civil servants coalition governments coalitions communist communist parties Congressional elections constituencies constituents constitution constitutional arrangements councils democracies democracy democratic systems economic policies election electioneering electoral competition electorate expenditure federal government Financial support fiscal fiscal policies fiscal policy freedom general elections government consumption government employees government management government policies government policy Human Resources income taxes inflation left-wing legislative assemblies levels of government lower house macroeconomic conditions national elections national governments national level Parliament party affiliation Political affiliation political business cycle political economy political institutions political parties political patronage politicians popular participation presidential elections property taxes public debt Public Economics public finance public policy public service public service delivery public services public works roads sales taxes state budget state elections state funds state government state income suffrage tax tax collection tax collections tax cuts tax revenue tax revenues voter turnout voters water supply The author studies the effect of state legislative assembly elections, on the policies of state governments in 14 major states of India, from 1960 to 1996. She identifies the effect of the timing of elections using an instrument for the electoral cycle that distinguishes between constitutionally scheduled elections, and midterm polls. She contrasts two levers of policy manipulation - fiscal policy and public service delivery - to distinguish between alternative models of political cycles. The predictions of three models are tested: 1) Populist cycles to woo uninformed and myopic voters. 2) Signaling models with asymmetric information. 3) A moral hazard model with high discounting by political agents. The empirical results for fiscal policy show that election years have a negative effect on some commodity taxes, a positive effect on investment spending, but no effect on deficits, primarily because consumption spending is reduced. With regard to public service delivery, elections have a positive and large effect on road construction by state public works departments. Strikingly, the fiscal effects are much smaller than the effect on roads. The author argues that the pattern of evidence is inconsistent with the predictions of models of voter myopia, and asymmetric information. She explores an alternative moral hazard model in which the cycle is generated by high political discounting, and career concerns persuade politicians to exert greater effort in election years on the management of public works. 2015-01-21T22:47:11Z 2015-01-21T22:47:11Z 2000-09 http://hdl.handle.net/10986/21330 en_US Policy Research Working Paper;No. 2454 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank, Washington, DC Publications & Research South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	Political factors State politics Election statistics State governments Constitutional guarantees Policy making Fiscal policy Public service delivery Voting status Information analysis Commodity taxation Investments Deficits Road construction accounting authority borrowing budget deficit budget deficits campaign central government central government budgets central taxes civil servants coalition governments coalitions communist communist parties Congressional elections constituencies constituents constitution constitutional arrangements councils democracies democracy democratic systems economic policies election electioneering electoral competition electorate expenditure federal government Financial support fiscal fiscal policies fiscal policy freedom general elections government consumption government employees government management government policies government policy Human Resources income taxes inflation left-wing legislative assemblies levels of government lower house macroeconomic conditions national elections national governments national level Parliament party affiliation Political affiliation political business cycle political economy political institutions political parties political patronage politicians popular participation presidential elections property taxes public debt Public Economics public finance public policy public service public service delivery public services public works roads sales taxes state budget state elections state funds state government state income suffrage tax tax collection tax collections tax cuts tax revenue tax revenues voter turnout voters water supply
spellingShingle	Political factors State politics Election statistics State governments Constitutional guarantees Policy making Fiscal policy Public service delivery Voting status Information analysis Commodity taxation Investments Deficits Road construction accounting authority borrowing budget deficit budget deficits campaign central government central government budgets central taxes civil servants coalition governments coalitions communist communist parties Congressional elections constituencies constituents constitution constitutional arrangements councils democracies democracy democratic systems economic policies election electioneering electoral competition electorate expenditure federal government Financial support fiscal fiscal policies fiscal policy freedom general elections government consumption government employees government management government policies government policy Human Resources income taxes inflation left-wing legislative assemblies levels of government lower house macroeconomic conditions national elections national governments national level Parliament party affiliation Political affiliation political business cycle political economy political institutions political parties political patronage politicians popular participation presidential elections property taxes public debt Public Economics public finance public policy public service public service delivery public services public works roads sales taxes state budget state elections state funds state government state income suffrage tax tax collection tax collections tax cuts tax revenue tax revenues voter turnout voters water supply Khemani, Stuti Political Cycles in a Developing Economy : Effect of Elections in Indian States
geographic_facet	South Asia India
relation	Policy Research Working Paper;No. 2454
description	The author studies the effect of state legislative assembly elections, on the policies of state governments in 14 major states of India, from 1960 to 1996. She identifies the effect of the timing of elections using an instrument for the electoral cycle that distinguishes between constitutionally scheduled elections, and midterm polls. She contrasts two levers of policy manipulation - fiscal policy and public service delivery - to distinguish between alternative models of political cycles. The predictions of three models are tested: 1) Populist cycles to woo uninformed and myopic voters. 2) Signaling models with asymmetric information. 3) A moral hazard model with high discounting by political agents. The empirical results for fiscal policy show that election years have a negative effect on some commodity taxes, a positive effect on investment spending, but no effect on deficits, primarily because consumption spending is reduced. With regard to public service delivery, elections have a positive and large effect on road construction by state public works departments. Strikingly, the fiscal effects are much smaller than the effect on roads. The author argues that the pattern of evidence is inconsistent with the predictions of models of voter myopia, and asymmetric information. She explores an alternative moral hazard model in which the cycle is generated by high political discounting, and career concerns persuade politicians to exert greater effort in election years on the management of public works.
format	Publications & Research
author	Khemani, Stuti
author_facet	Khemani, Stuti
author_sort	Khemani, Stuti
title	Political Cycles in a Developing Economy : Effect of Elections in Indian States
title_short	Political Cycles in a Developing Economy : Effect of Elections in Indian States
title_full	Political Cycles in a Developing Economy : Effect of Elections in Indian States
title_fullStr	Political Cycles in a Developing Economy : Effect of Elections in Indian States
title_full_unstemmed	Political Cycles in a Developing Economy : Effect of Elections in Indian States
title_sort	political cycles in a developing economy : effect of elections in indian states
publisher	World Bank, Washington, DC
publishDate	2015
url	http://hdl.handle.net/10986/21330
_version_	1764447955170885632

Political Cycles in a Developing Economy : Effect of Elections in Indian States

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