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on Financial Development and Growth |
| By: | Kouvavas, Omiros |
| Abstract: | Recent literature on Political Budget Cycles has provided appealing evidence that their existence is conditional to country specific characteristics. In this paper we hypothesize that the level of social capital prevailing in a country might be an underlying fundamental reason that might be driving these results. We provide strong evidence that political budget cycles are only present in low social capital countries by utilizing a large panel data set for 63 democratic countries. We also show that the political budget cycles occur both in developing and developed countries under low social capital. Simultaneously, our results are robust under most other conditional effects considered by the literature. Finally, we also propose a theoretical model of conditional capital budget cycles by adapting a moral hazard model to account for different distributions of social capital. |
| Keywords: | Political Budget Cycles; Political Processes; Trust; Social Capital; |
| JEL: | D72 E02 E32 E62 H60 |
| Date: | 2013–06–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:57504&r=fdg |
| By: | Dudley, William (Federal Reserve Bank of New York) |
| Abstract: | Remarks before the New York Association for Business Economics, New York City. |
| Keywords: | balance sheet; economic growth; fiscal restraint; capital spending; lift-off; tapering; capital requirements; reverse repo facility (RRP) |
| JEL: | E2 E52 |
| Date: | 2014–05–20 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsp:136&r=fdg |