Can Political Fiscal Cycles be Stopped? Evidence from a Public Spending Ban Near Elections
Zoom: https://bsg.zoom.us/j/91663686066?pwd=QWNHVEY4YzhWMUtvMHZmN0RKQWsyQT09 Meeting ID: 916 6368 6066 Passcode: 322203
(joint work with Luis R. Martínez, U. Chicago)

Abstract: Political fiscal cycles are pervasive across democracies; there is the use of the public purse for political gain close to election dates. What policies are there to stop the political fiscal cycles and are they effective? Using contract-level microdata for the entire Colombian state, we study the effects of a regulation that forbids contracting at all levels of government in the four months before the 2018 national elections. We find that there is substantial bunching in spending in the weeks immediately before the regulation comes into effect. These last-minute contracts: (i) disproportionately benefit previous local political candidates. Using text analysis for matching, we find that: (ii) these contracts disproportionately go to contractors without previous experience, and (iii) have more time extensions and over-costs. As part of our analysis of mechanisms, we show that the bunching is related to low institutional capacity and that contracts in the bunching period are increasingly targeted to high vote-performing politicians. Overall, we find that forbidding contracting actual creates a displacement of the political fiscal cycle rather than stopping it.
Date: 15 February 2022, 12:30
Venue: Nuffield College, New Road OX1 1NF
Venue Details: Clay Room (in-person event)
Speaker: Nelson Ruiz (University of Oxford)
Organising department: Nuffield College
Organisers: Ezequiel González Ocantos (Nuffield College), Pepper Culpepper (Nuffield College), Professor Jane Green (Nuffield College)
Organiser contact email address: maxine.collett@nuffield.ox.ac.uk
Part of: Nuffield College Political Science Seminars
Booking required?: Not required
Audience: Members of the University only
Editor: Maxine Collett