The political budget cycle in local government finance: a balance sheet approach on the example of cities with poviat rights
Article Sidebar
Main Article Content
Abstract
The aim of this paper is to carry out an empirical verification of the occurrence of the political cycle in cities with poviat rights in Poland. Current challenges of local financial management, previous results of national and international research, and threats associated with various types of risks, including political risks, are the motivation for addressing this topic in the paper. The research was conducted using panel data analysis, and its results indicate the existence of a political budget cycle, the effects of which are reflected in the asset and financial situation of cities. The study used balance sheet data, which significantly distinguishes it from previous studies, both domestic and foreign. The results allow us to conclude that balance sheet information should find wider application in monitoring the security and stability of local government finances in Poland.
Downloads
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Arulampalam, W., Dasgupta, S., Dhillon, A., Dutta, B. (2009). Electoral Goals and Center-State Transfers: A Theoretical Model and Empirical Evidence from India. Journal of Development Economics, 88 (1), pp. 103–119, https://doi.org/10.1016/j.jdeveco.2008.01.001
Banaszewska, M., Bischoff, I. (2017). The Political Economy of EU-funds: Evidence from Poland. Jahrbucher Fur Nationalokonomie, Statistik, 237 (3), pp. 191–224, https://doi.org/10.1515/jbnst-2017-1105
Benito, B., Bastida, F., Vicente, C. (2012). Political Budget Cycles in Local Governments. Lex Localis – Journal of Self-Government, 10 (4), pp. 341–361.
Benito, B., Guillamón, M.‑D., Ríos, A. M. (2021). Political Budget Cycles in Public Revenues: Evidence From Fines. SAGE Open, 11 (4), pp. 1–13, https://doi.org/10.1177/21582440211059169
Biondi, Y. (2016a). Public debt accounting and management in UK: Refunding or refinancing? Or, the strange case of Doctor Jekyll and Mr Hyde in the aftermath of the Global Financial Crisis. Accounting Forum, 40 (2), pp. 89–105, https://doi.org/10.1016/j.accfor.2016.02.003
Biondi, Y. (2016b). Accounting representations of public debt and deficits in European central government accounts: An exploration of anomalies and contradictions. Accounting Forum, 40 (3), pp. 205–219, https://doi.org/10.1016/j.accfor.2016.05.003
Blais, A., Nadeau, R. (1992). The electoral budget cycle. Public Choice, 74 (4), pp. 389–403, https://doi.org/10.1007/bf00137686
Bonfatti, A., Forni, L. (2019). Fiscal rules to tame the political budget cycle: Evidence from Italian municipalities. European Journal of Political Economy, 60, N. PAG, https://doi.org/10.1016/j. ejpoleco.2019.06.001
Budzeń, D. (2016). Refinansowanie długu lokalnego w Polsce. Studia BAS, 47 (3), pp. 197–219, https://orka.sejm.gov.pl/wydbas.nsf/0/FE4F389F30776AA3C1258059002D95D9/%24File/Strony%20odStudia_BAS_47-10.pdf
Budzeń, D. (2021). Ryzyko polityczne w zarządzaniu długiem lokalnym w Polsce. Studia z Polityki Publicznej, 8 (2 (30)), pp. 29–45, https://doi.org/10.33119/KSzPP/2021.2.2
Budzeń, D. (2023). Ryzyko płynności jednostek samorządu terytorialnego w Polsce w dobie COVID-19. In: J. Szołno-Koguc (Eds.) Finanse Samorządowe, Warszawa: Polska Akademia Nauk, pp. 285–299, doi: 10.24425/146953
Budzeń, D., Marchewka-Bartkowiak, K. (2022). Sovereign Asset and Liability Management (SALM): Perspective of Pandemic COVID-19 Outbreak in OECD Countries, Including
Poland. Studies in Logic, Grammar and Rhetoric, 67 (1), pp. 297–319, https://doi.org/10.2478/slgr-2022-0015
Budzeń, D., Wiśniewski, M. (2023). Cykl polityczny w wydatkach majątkowych jednostek samorządu terytorialnego. Optimum. Economic Studies, 3 (113), pp. 80–96, doi: 10.15290/ oes.2023.04.114.05
Cangoz, M. C., Boitreaud, S., Dychala, C. B. (2018). How Do Countries Use an Asset and Liability Management Approach? A Survey on Sovereign Balance Sheet Management. The World Bank Policy Research Working Paper 2018/8624.
Cioffi, M., Messina, G., Tommasino, P. (2012). Parties, institutions and political budget cycles at the municipal level. Temi di discussione (Economic working papers) 885, Bank of Italy, Economic Research and International Relations Area.
Das, U. S., Lu, Y., Papaioannou, M. G., Petrova, U. (2012). Sovereign Risk and Asser and Liability Management – Conseptual Issues. IMF Working Paper, 12 (241).
De la Higuera-Molina, E. J., Plata-Díaz, A. M., López-Hernández, A. M., Zafra-Gómez, J. L.
(2019). Dynamic-opportunistic behaviour in local government contracting-out decisions during the electoral cycle. Local Government Studies, 45 (2), pp. 175–195, https://doi.org/10.1080/ 03003930.2018.1533819
Drazen, A., Eslava, M. (2010). Electoral manipulation via voter-friendly spending: Theory and evidence. Journal of Development Economics, 92 (1), pp. 39–52, https://doi.org/10.1016/ j.jdeveco.2009.01.001
Fabozzi, F., Konishi, A. (1990). Asset Liability Management. Chicago: Probus Publishing Co.
Ferraresi, M. (2021). Political Budget Cycle, Tax Collection, and Yardstick Competition. B. E. Journal of Economic Analysis, Policy, 21 (3), pp. 1149–1161, https://doi.org/10.1515/bejeap-2020-0380
Filipiak, B. Z., Kluza, K. (2022). Political Business Cycle in Local Governments in Transition and Developing Economies. Literature Review and Empirical Study for Poland, Lex Localis – Journal of Local Self-Government, 20 (4), pp. 1057–1082, https://doi.org/10.4335/20.4.1057-1082
Filipiak, B. Z., Wyszkowska, D. (2022). Stabilność fiskalna w krajach UE. Wiadomości Statystyczne. The Polish Statistician, 67 (8), pp. 17-40, https://doi.org/10.5604/01.3001.0015.9703
Freire, M. E., Kopanyi, M. (2018, June). Asset and debt management for cities. Working Paper, Cities that Work. International Growth Centre.
Furdas, M., Homolkova, K., Kis-Katos, K. (2015). Local Political Budget Cycles in a Federation: Evidence from West German Cities. IZA Discussion Paper No. 8798, SSRN, http://dx.doi.org/10.2139/ssrn.2564931
Hibbs, D. (1977). Political Parties and Macroeconomic Policy, The American Political Science Review, 71 (4), pp. 1467–1487, https://doi.org/10.2307/1961490
International Monetary Fund (2022, Oct). Global Financial Stability Report – Navigating the High-Inflation Environment. Washington, DC: IMF.
Khemani, S. (2007). The Political Economy of Equalization Transfers. In: J. Martinez-Vazquez, B. Searle (Eds.). Fiscal Equalization. Boston, MA: Springer, https://doi.org/10.1007/978-0- 387-48988-9_19
Kneebone, R. D., McKenzie, K. J. (2001). Electoral and Partisan Cycles in Fiscal Policy: AnExamination of Canadian Provinces, International Tax and Public Finance, 8, pp. 753–774, https://doi.org/10.1023/A:1012895211073
Köppl Turyna, M., Kula, G., Balmas, A., Waclawska, K. (2016). The effects of fiscal decentralisation on the strength of political budget cycles in local expenditure. Local Government Studies, 42 (5), pp. 785–820, https://doi.org/10.1080/03003930.2016.1181620
Newberry, S. (2015). Public sector reforms and sovereign debt management: Capital market development as strategy? Critical Perspectives on Accounting, 27, pp. 101–117, https://doi.org/10.1016/j.cpa.2013.10.006
Nordhaus, W. D. (1975). The Political Business Cycle. Review of Economic Studies, 42 (1), pp. 169–191, https://doi.org/10.2307/2296528
Olejnik, Ł. W. (2022). Cycles in a cycle: investment expenditures and their composition during the political budgetary cycle. Local Government Studies, 48 (3), pp. 640–671, https://doi.org/10.1080/ 03003930.2020.1851207
OECD (2013, Jan). Debt and Macroeconomic Stability, OECD Economics Department Policy Notes, 2012, No. 16.
Persson, T., Svensson, L. (1989). Why a stubborn conservative would run a deficyt policy with time-inconsistent preferences, The Quarterly Journal of Economics, 104 (2), pp. 325–345, https://doi.org/10.2307/2937850
Persson, T., Tabellini, G. (2003). Do Electoral Cycles Differ Across Political Systems? IGIER Working Paper, 232, https://doi.org/10.2139/ssrn.392643
Repetto, L. (2018). Political Budget Cycles with Informed Voters: Evidence from Italy. Economic Journal, 128 (616), pp. 3320–3353, https://doi.org/10.1111/ecoj.12570
Rogoff, K., Sibert, A. (1988). Elections and Macroeconomic Policy Cycles, Review of Economic Studies, 55 (1), pp. 1–16, https://doi.org/10.2307/2297526
Samuelson, P., Nordhaus, W. (2000). Ekonomia 1. Warszawa: PWN.
Setiawan, D. Rizkiah, F. (2017). Political Budget Cycles in Municipalities: Evidence from Indonesia. International Journal of Business, Society, 18 (3), pp. 533–546, https://doi.org/10.33736/ijbs.3144.2017
Sheng, A., Cho, Y. J. (1993). Risk management and stable financial structure. The World Bank Policy Research Working Paper, 1993/1109
Swianiewicz, P., Kurniewicz, A. (2018). Cykl polityczny w opłatach za lokalne usługi publiczne w Polsce. Studia Regionalne i Lokalne, 2 (72), pp. 56–77, https://doi.org/10.7366/1509499527204
Wiśniewski, M. (2016). Klasyfikacja i kwantyfikacja ryzyka portfelowego w zarządzaniu długiem samorządowym w Polsce. Finanse, 9 (1), pp. 155–179, https://knfpan.pan.pl/images/Fin._19-16_11‑M. Wisniewski.pdf
Wyszkowski, A., Zegarowicz, Ł. (2018). Ocena Występowania Politycznego Cyklu Budżetowego W Polsce. Research Papers of the Wroclaw University of Economics / Prace Naukowe Uniwersytetu Ekonomicznego We Wroclawiu, 509, pp. 451–466, https://doi.org/10.15611/pn.2018.509.38
Veiga, L. G., Veiga, F. J. (2007). Political business cycles at the municipal level. Public Choice, 131 (1/2), pp. 45–64, https://doi.org/10.1007/s11127-006-9104-2