Polity age and political budget cycles: Evidence from a Danish municipal reform

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Incumbent incentive for competence-signaling and lack of voter information are generally thought to be factors that increase the prevalence of political budget cycles. These mechanisms should be more prevalent in new political units. Since the creation of new political units is rarely exogenous, however, serious endogeneity issues would be an issue for empirical studies of this subject. To overcome these problems, I use a Danish local government reform—which amalgamated some (but not all) Danish municipalities, thereby creating new political units—in a way that is arguably quasi-experimental to study whether political budget cycles are larger in new political units. Contrary to theoretical predictions, political budget cycles seem to be of a smaller scale in the new municipalities, but only regarding budget cycles in budgetary overruns. The findings are of wider interest for discussions about the mechanisms behind context-conditional political budget cycles.

Original languageEnglish
JournalEuropean Journal of Political Economy
Pages (from-to)75-84
Publication statusPublished - Mar 2018


  • Budgetary overruns
  • Conditional political budget cycles
  • Local government budget
  • Local government reform
  • Political budget cycles
  • Quasi-experiment


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