Political Budget Cycles in Papua New Guinea

Author/Editor:

Ebrima A Faal

Publication Date:

September 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper assesses the presence of opportunistic electoral budget cycles in Papua New Guinea. Using quarterly time series data, a clear pattern emerges of pre-election manipulations of fiscal policy by incumbent governments, mainly in the form of increased development spending and overall primary expenditure, followed in some cases by retrenchment in post-election periods. These findings are consistent with the predictions of rational opportunistic political business cycle theory. It is noteworthy that revenue was not statistically significantly related to elections, either in the pre- or post-election period. In this regard, electoral swings in fiscal deficits reflect a preference for influencing expenditures rather than taxation.

Series:

Working Paper No. 2007/219

Subject:

Business cycles Expenditure Fiscal policy Public investment and public-private partnerships (PPP) Total expenditures

English

Publication Date:

September 1, 2007

ISBN/ISSN:

9781451867831/1018-5941

Stock No:

WPIEA2007219

Pages:

16

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