Prague Economic Papers 2011, 20(1):59-70 | DOI: 10.18267/j.pep.387

Political Business Cycle in Czech Municipalities

Lucie Sedmihradská, Rudolf Kubík, Jakub Haas
University of Economics, Prague (sedmih@vse.cz; rudolf.kubik@vse.cz; haasj@post.cz).

The paper examines the political business cycle at the municipal level in the Czech Republic using data for 205 municipalities in the period 2001-2007. We introduce empirical models based on fixed-effects panel data regression testing the capital and current expenditure manipulation prior to elections. The results indicate significant increase in capital expenditures and significant decrease in current expenditures prior to elections. At the same time the manipulation with capital expenditures does not increase the probability of re-election for the incumbents in the Czech municipalities.

Keywords: local government, political business cycle, elections, Czech municipalities, panel data regressions
JEL classification: D72, D78, H72

Published: January 1, 2011  Show citation

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Sedmihradská, L., Kubík, R., & Haas, J. (2011). Political Business Cycle in Czech Municipalities. Prague Economic Papers, 20(1), 59-70. doi: 10.18267/j.pep.387
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