2013年-IMF国际货币组织全球_Fiscal_Policy_over_the_Election_Cycle_in_Low_24页_1mb

Summary of "Fiscal Policy over the Election Cycle in Low-Income Countries"

Core Content

This working paper by Christian Ebeke and Dilan Ölçer investigates the behavior of fiscal policy in Low-Income Countries (LICs) during and after national elections. It explores how political incentives influence government spending, taxation, and fiscal balances, and assesses the effectiveness of fiscal rules and IMF programs in mitigating these effects.

Main Findings

• Fiscal Expansion During Elections: Government consumption significantly increases during election years, leading to higher fiscal deficits. On average, government consumption as a share of GDP rises by about 0.8 percentage points during election years.

• Fiscal Adjustment Post-Election: In the two years following elections, fiscal adjustment occurs primarily through increased revenue mobilization in trade taxes and cuts to government investment. However, there is no significant reduction in current spending or enough revenue mobilization to fully offset the election-year fiscal expansion.

• Overall Fiscal Balance: The overall fiscal deficit ratio increases by about 1 percentage point of GDP during election years, driven mainly by higher government consumption. Post-election, the deficit decreases by about 0.5 percentage points, but the adjustment is partial and not sufficient to restore fiscal buffers to their pre-election levels.

• Political Budget Cycles: The study finds evidence of political budget cycles in LICs, where governments tend to prioritize visible current expenditures over public investment during election periods. This behavior is strategic, as it may enhance re-election prospects.

• Role of Fiscal Rules and IMF Programs: Both the presence of national fiscal rules and IMF program participation help reduce the magnitude of political budget cycles in LICs. Countries with active IMF programs experience lower political budget cycles compared to non-participating years.

Methodology and Data

• Data Source: The paper uses a comprehensive dataset covering 68 LICs over 21 years (1990–2010), including:

  • NELDA dataset (Hyde and Marinov, 2012) for election timing.
  • IMF WEO database for fiscal variables.
  • Penn World Table 7.1 for GDP growth.
  • World Development Indicators for natural resource rents, population, etc.

• Empirical Model: A dynamic panel model is used to estimate the impact of elections on fiscal variables. The model includes:

  • Lagged dependent variables to account for fiscal inertia.
  • Country-specific effects.
  • Control variables such as real GDP growth, inflation, trade openness, foreign aid, external debt, natural resource rents, and fiscal rules.

• Estimators: The paper employs System-GMM estimator to address endogeneity and potential bias in the estimation, which is more efficient than the difference-GMM estimator when explanatory variables are persistent.

Key Variables and Their Impact

Endogeneity of Election Timing

• The paper addresses the endogeneity of election timing by distinguishing between predetermined elections (scheduled by constitution) and endogenous elections (held earlier or later than scheduled).
• 56.5% of the 191 elections in the sample were predetermined.
• The results remain robust when using predetermined elections, indicating that the observed fiscal behavior is not due to arbitrary timing but is a systematic response to elections.

Domestic and International Scrutiny

• Domestic Constraints: National fiscal rules are shown to reduce the political budget cycle. However, their enforcement and compliance are limited in many LICs.
• IMF Programs: Participation in IMF programs is associated with lower political budget cycles, suggesting that conditionalities and external oversight help constrain fiscal discretion.

Policy Implications

• Macroeconomic Costs: Elections impose macroeconomic costs, particularly through increased government consumption and reduced public investment.
• Fiscal Vulnerability: LICs are especially vulnerable due to weak institutional capacity and poor transparency, which exacerbate the effects of political budget cycles.
• Need for Institutional Reforms: The paper highlights the importance of strengthening fiscal rules and enhancing IMF program effectiveness to reduce fiscal volatility and promote long-term economic stability.

Conclusion

Elections in Low-Income Countries lead to fiscal expansion during the year of the election and partial fiscal adjustment in the following years, primarily through increased trade tax revenue and reduced public investment. While fiscal rules and IMF programs help mitigate these effects, their impact is limited due to weak enforcement and compliance. The paper underscores the strategic nature of fiscal policy in response to electoral incentives and calls for stronger institutional frameworks to ensure fiscal discipline and sustainable development.