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Constraining Political Budget Cycles: Media Strength and Fiscal Institutions in the Enlarged EU

Esther Ademmer, Ferdinand Drehe, (2016), “Constraining Political Budget Cycles: Media Strength and Fiscal Institutions in the Enlarged EU”, JCMS, Volume 54, Issue 3, May

This article revisits institutional constraints to political budget cycles (PBCs) in the enlarged European Union (EU). Based on a panel of 25 Member States, we show that governments frequently fiscally stimulate the economy prior to elections. We argue that the occurrence of PBCs in the enlarged EU can be well explained by a peculiar interaction of two prominently discussed institutional constraints: fiscal institutions and media strength. Fiscal rules only help to limit the extent of PBCs in countries where the media is relatively weak, whereas they fail to do so in countries that host a strong press. Suggesting that this may be due to the usage of creative accounting practices in weaker media environments, we conclude that a powerful press remains key to eradicating PBCs in the EU.

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