Budgets,expenditure composition and political manipulation

Abstract

This paper analyses the presence of political cycles in Portuguese Governments’ expenditures using monthly data over the period 1991–2013 for the main categories of government expenditures. The results indicate that Portuguese Governments act opportunistically regarding the budget surplus and that they favour capital instead of current spending near to the elections. Moreover, right-wing governments are more prone to reduce expenditures and deficits after the elections than left-wing ones. A deeper disaggregated analysis of the components of government expenditures corroborates these findings while disentangling other relevant patterns of political manipulation in Portugal.