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Fiscal Deficits and Executive Planning Horizons

Seiferling, MLA; (2019) Fiscal Deficits and Executive Planning Horizons. Political Science Research and Methods (In press). Green open access

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Abstract

Executive control of government is generally not a long-term job. In such cases, relatively short executive tenure should be expected to play an important role in determining the degree to which policymakers internalize the future costs associated with their current fiscal behavior. The effects of policymaker’s expected planning horizons on macroeconomic outcomes, however, have been difficult to model outside of a fixed term limit context due to the unobserved likelihood of remaining in office, along with potential endogeneity problems where re-election campaigns can be enhanced with generous, deficit financed expenditures in election years. From a globally representative sample of 79 countries over a 32 year period (1980-2012), this paper provides empirical evidence suggesting that incumbent governments who know that will not be in office in the following period with a probability of one, are found to generate significantly higher deficits in a linear discounting model, and are found to produce the least responsible fiscal outcomes where the likelihood of re-election is around fifty percent in quadratic discounting models.

Type: Article
Title: Fiscal Deficits and Executive Planning Horizons
Open access status: An open access version is available from UCL Discovery
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: fiscal performance; executive planning horizons; political business cycle
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Political Science
URI: https://discovery.ucl.ac.uk/id/eprint/10068003
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