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Modelling of the political business cycle and the impact of transparency

  • This paper models the political budget cycle with stochastic differential equations. The paper highlights the development of future volatility of the budget cycle. In fact, I confirm the proposition of a less volatile budget cycle in future. Moreover, I show that this trend is even amplified due to higher transparency. These findings are new evidence in the literature on electoral cycles. I calibrate a rigorous stochastic model on public deficit-to-GDP data for several countries from 1970 to 2012.

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Author of HS ReutlingenHerzog, Bodo
Erschienen in:Economic and social development : 19th International Scientific Conference on Economic and Social Development ; book of proceedings , Melbourne, 9-10 February 2017
Publisher:Development and Entrepreneurship Agency
Place of publication:Varazdin, Croatia
Editor:Goran Kozina
Document Type:Conference proceeding
Publication year:2017
Tag:political budget cycle; stochastic modelling; transparency
Page Number:11
First Page:197
Last Page:207
DDC classes:330 Wirtschaft
Open access?:Ja
Licence (German):License Logo  Open Access