Domestic vs. External Economic Sectors and the Political Process: Insights from Greece

Building on the well-established relationship between economic dynamics and political processes, we focus on the most important element of the political process, namely, general (or national) elections, and look into their effects on public finance and total economic output. In this vein, the present study has three objectives: (i) to investigate political budget cycles in Greece during the period known as the ‘Third Hellenic Republic’ (in Greek, ‘Metapolitefsi’, hereafter THR) since 1974; (ii) to assess whether national elections affect total economic activity in a stabilizing or destabilizing way; and (iii) to examine the possible effects of the external sector of the economy on the budget balance. The empirical findings of our analysis document how the Greek economy was characterized by sharp political budget cycles in correspondence with the THR, exerting a destabilizing effect on the total output of the economy. Performances of the external sector of the economy have significantly affected budget balances in Greece

Political budget cycles and effects of the excessive deficit procedure: The case of Greece

We study the existence, magnitude, and determinants of political budget cycles in Greece over the past 40 years. We find that the Greek economy has been characterised by extensive electorally-motivated cycles, which are not typical of a developed country. However, we show that the corrective fiscal measures imposed by the European institutions in the face of the Greek debt crisis suppressed these pre-electoral fiscal policy manipulations. In particular, the imposition of the Excessive Deficit Procedure of the Stability and Growth Pact reduced the ability of domestic politicians to increase public deficits to the point where it eliminated, albeit only marginally, political budget cycles

Economic Downturns, Urban Growth and Suburban Fertility in a Mediterranean Context

Despite the wealth of micro–macro data on short-term demographic dynamics, the impact of metropolitan growth and economic downturns on local fertility is still under-investigated in advanced economies. Recent studies in low-fertility contexts have assumed suburban birth rates as being systematically higher than urban and rural rates. This assumption (hereafter, known as the ‘suburban fertility hypothesis’) was grounded on stylized facts and spatial regularities that imply a significant role of both macro (contextual) and micro (behavioral) factors positively influencing fertility in suburban locations. To verify such a hypothesis from a macro (contextual) perspective, the present study compares the general fertility rate of urban, suburban, and rural settlements of the Athens’ metropolitan region (Greece) at various observation years between 1860 and 2020. Long-term Athens’ growth represented a sort of ‘quasi-experiment’ for Mediterranean Europe, linking sequential urban stages and distinctive waves of economic expansion and recession. Using multivariate exploratory analysis and global/local econometric models, a dominant ‘rural’ fertility regime was recorded for 1860 and 1884. A characteristic ‘urban’ fertility regime was, instead, found over a relatively long, intermediate period between 1956 and 1990. Higher fertility in suburban settlements (10 km away from downtown Athens, on average) was, finally, observed since 2000. Considering a sufficiently long-time interval, the existence of multiple fertility regimes along the distance gradient has demonstrated how fertility dynamics are intrinsically bonded with metropolitan growth, economic downturns, and social transformations in Mediterranean Europe

Toward a political budget cycle? Unveiling long-term latent paths in Greece

Empirical studies demonstrated the existence of political budget cycles in many countries, although mechanisms underlying such cycles remain substantially unclear. The present work investigates this mechanism using data from the Greek economy encompassing four decades (1980–2018). Results of regression models indicate that opportunistic political and economic behaviors arise on the part of elected politicians in power via manipulation of public expenditure rather than through the handling of public revenue. In years of general or parliamentary elections, public expenditure rose by about 2.2% of the country’s gross domestic product. This increase is atypical for advanced economies with well-established democratic systems. A specific analysis delineating what specific categories of public spending are associated with political budget cycles, also demonstrated that they were created through final consumption expenditure and especially through collective consumption expenditure. Our findings are robust to various specifications of the econometric model, both linear and non-linear. We conclude that, in the case of Greece, future fiscal rules aimed at suppressing political budget cycles should control pre-election collective consumption expenditures instead of regulating direct and indirect taxes. © 2021, The Author(s), under exclusive licence to Springer Nature B.V

Political budget cycles and effects of the excessive deficit procedure: The case of Greece

We study the existence, magnitude, and determinants of political budget cycles in Greece over the past 40 years. We find that the Greek economy has been characterised by extensive electorally-motivated cycles, which are not typical of a developed country. However, we show that the corrective fiscal measures imposed by the European institutions in the face of the Greek debt crisis suppressed these pre-electoral fiscal policy manipulations. In particular, the imposition of the Excessive Deficit Procedure of the Stability and Growth Pact reduced the ability of domestic politicians to increase public deficits to the point where it eliminated, albeit only marginally, political budget cycles. © 202

Toward a political budget cycle? Unveiling long-term latent paths in Greece

Empirical studies demonstrated the existence of political budget cycles in many countries, although mechanisms underlying such cycles remain substantially unclear. The present work investigates this mechanism using data from the Greek economy encompassing four decades (1980–2018). Results of regression models indicate that opportunistic political and economic behaviors arise on the part of elected politicians in power via manipulation of public expenditure rather than through the handling of public revenue. In years of general or parliamentary elections, public expenditure rose by about 2.2% of the country’s gross domestic product. This increase is atypical for advanced economies with well-established democratic systems. A specific analysis delineating what specific categories of public spending are associated with political budget cycles, also demonstrated that they were created through final consumption expenditure and especially through collective consumption expenditure. Our findings are robust to various specifications of the econometric model, both linear and non-linear. We conclude that, in the case of Greece, future fiscal rules aimed at suppressing political budget cycles should control pre-election collective consumption expenditures instead of regulating direct and indirect taxes