Working Paper: CEPR ID: DP17709
Authors: Andrea Cintolesi; Daniela Iorio; Andrea Mattozzi
Abstract: We assemble a comprehensive dataset covering a large set of old and new democracies over four decades to document the dynamics of rulers alternating in office. We construct a measure of the tenure accumulated in office by the ruling party (or a coalition of parties) since the establishment of democracy. Our measure reveals a large variation in the political tenure of rulers alternating in office and uncovers an important fiscal effect of political tenure. A ten percent increase in tenure rises government expenditure as percentage of GDP of 0.23 percentage points, and deficit of 0.21 percentage points over the period 1972-2014. We outline a conceptual framework that accounts for the uncovered empirical relationship and suggest the relevance of a fading “honeymoon effect,” which revisits Olson (1984) argument on the dynamic effect of distributional coalitions. The older the ruling group, the more divisive the available policies that can be implemented, which require costly transfers in the form of public expenditure to keep the group together.
Keywords: Political tenure; Government expenditure; Panel data
JEL Codes: D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political tenure (D72) | Government expenditure as a percentage of GDP (H50) |
| Political tenure (D72) | Government deficit (H62) |
| Political tenure (D72) | Fiscal aggregates (E62) |
| Tenure of the prime minister (C41) | Fiscal effect of the ruling party's tenure (E62) |