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Political Budget Cycles and Reelection Prospects in Greece's Municipalities

Research output: Contribution to journalArticle

Georgios Chortareas, Vasileios Logothetis, Andreas A. Papandreou

Original languageEnglish
JournalEuropean Journal of Political Economy
Early online date23 Feb 2016
Publication statusE-pub ahead of print - 23 Feb 2016


King's Authors


Abstract This paper considers the presence of political budget cycles in Greece's municipalities. We construct a new dataset from primary sources and we find strong evidence of pre-electoral manipulation through increased expenditures and excessive borrowing. We use a dynamic panel data approach producing evidence of opportunistic behavior in local government finances. Our results are robust in the face of a series of controls including mayors running for reelection, their political alignment with the central government, and prolonged terms. Moreover, the results are robust to the exclusion of small sized municipalities and to the restriction of the time range of our investigation to the post-Maastricht period. We also consider whether opportunistic policies influence incumbents' reelection prospects finding that increased expenditures and election year opportunistic excesses are electorally rewarding. Our findings provide a characterization of opportunistic public finances management in Greek municipalities where electorally motivated budgetary decisions appear impervious to the various municipal reform attempts.

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