Monday, August 22, 2016

The Impact of Parties and Elections on Municipal Debt Policy in Mexico

Original Article
The Impact of Parties and Elections on Municipal Debt Policy in Mexico
Authors: AL Benton and HJM Smith

First published: 17 August 2016Full publication history
DOI: 10.1111/gove.12234View/save citation
Cited by: 0 articles

Article has an altmetric score of 7

Abstract

Opportunistic electoral fiscal policy cycle theory suggests that all subnational officials will raise fiscal spending during elections. Ideological partisan fiscal policy cycle theory suggests that only left-leaning governments will raise election year fiscal spending, with right-leaning parties choosing the reverse. This article assesses which of these competing logics applies to debt policy choices. Cross-sectional time-series analysis of yearly loan acquisition across Mexican municipalities—on statistically matched municipal subsamples to balance creditworthiness across left- and right-leaning governments—shows that all parties engage in electoral policy cycles but not in the way originally thought. It also shows that different parties favored different types of loans, although not always according to partisan predictions. Both electoral and partisan logics thus shape debt policy decisions—in contrast to fiscal policy where these logics are mutually exclusive—because debt policy involves decisions on multiple dimensions, about the total and type of loans.

http://onlinelibrary.wiley.com/doi/10.1111/gove.12234/abstract

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