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Political cycles in income from privatization: The case of Albania

  • The phenomenon of manipulation of the economy by the incumbent for electoral purpose is called Political Business Cycles (PBC). Using policy control economic instruments, such as fiscal and monetary instruments, governments may manipulate the economy to gain electoral advantage by producing growth and decreasing unemployment before elections. Earlier research on PBC in Albania found clear evidence of fiscal expansion before elections. In addition to increased income from taxes and borrowing, another source of financing the increased fiscal expansion in transition countries may be income from privatization, which is also the object of the analysis of this paper. In our analysis we apply standard econometric approach, used widely for research related to PBC. We test if income from privatization increases before elections. We find statistically significant increase of income from privatization before general (parliamentary) elections, which may lead us to conclude that one of the reasons may be to finance increased expendituresThe phenomenon of manipulation of the economy by the incumbent for electoral purpose is called Political Business Cycles (PBC). Using policy control economic instruments, such as fiscal and monetary instruments, governments may manipulate the economy to gain electoral advantage by producing growth and decreasing unemployment before elections. Earlier research on PBC in Albania found clear evidence of fiscal expansion before elections. In addition to increased income from taxes and borrowing, another source of financing the increased fiscal expansion in transition countries may be income from privatization, which is also the object of the analysis of this paper. In our analysis we apply standard econometric approach, used widely for research related to PBC. We test if income from privatization increases before elections. We find statistically significant increase of income from privatization before general (parliamentary) elections, which may lead us to conclude that one of the reasons may be to finance increased expenditures before elections. Another motivation, behind this behavior of the incumbent, may be rent – seeking. These results are of particular interest, as it is for the first time that income from privatization is analyzed in conjunction with PBC.show moreshow less

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Metadaten
Institutes:Fakultät Sozial- und Wirtschaftswissenschaften / Lehrstuhl für Volkswirtschaftslehre, insbesondere Finanzwissenschaft
Author:Drini Imami, Endrit Lami, Holger Kächelein
Contributer:Felix Stübben
Publishing Institution:BERG (Bamberg Economic Research Group)
Place of publication:Bamberg
Publisher:opus
Year of publication:2013
Pages / Size:20 S.
Collections (Serial Number):BERG working paper series (77)
Year of first publication:2011
Source/Other editions:zuerst erschienen im BERG-Verlag, 2011
To order a print copy:http://www.uni-bamberg.de/vwl/forschung/wps/
SWD-Keyword:Albanien ; Privatisierung ; Politischer Konjunkturzyklus ; Online-Publikation
Keywords:Albania, Political Business Cycle, Privatization
RVK-Classification:QG 490 ; QC 330
URN:urn:nbn:de:bvb:473-opus4-31937
ISBN:978-3-931052-87-4
Document Type:Working paper
Language:English
Publishing Institution:Otto-Friedrich-Universität Bamberg
Release Date:2013/12/20
Licence (German):License LogoDeutsches Urheberrecht