Revenue decentralization, central oversight and the political budget cycle : evidence from Israel

This paper examines whether revenue decentralization and direct external financial supervision affect the incidence and strength of political budget cycles, using a panel of Israeli municipalities during the period 1999-2009. We find that high dependence on central government transfers—as reflected in a low share of locally raised revenues in the municipality’s budget—exacerbates political budget cycles, while tight monitoring—exercised through central government appointment of external accountants to debt accumulating municipalities—eliminates them. These results suggest that political budget cycles can result from fiscal institutions that create soft budget constraints: that is, where incumbents and rational voters can expect that the costs of pre-election expansions will be partly covered later by the central government

European fiscal reform preferences of parliamentarians in France, Germany and Italy

Using data from a unique survey of members of parliaments in France, Germany and Italy in 2018, we estimate the effects of three dimensions on EU and Euro Area fiscal reform preferences: nationality, political ideology and populism. We predict and confirm that a German populist party on the right is most opposed to a more developed European fiscal union, while a non-populist politician on the political left in France or Italy is most integrationist. Furthermore, the relative position of French and Italian policymakers is issue dependent and the left dimension outweighs the German dimension in two out of seven reform issues. Finally, populism intensifies the polarizing impact of national interests