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Explaining Budgetary Indiscipline: Evidence from Spanish Municipalities

Author: IGNACIO LAGO-PEÑAS AND SANTIAGO LAGO-PEÑAS
Published in PFM, Vol. 8 No. 1

The search for political support leads ultimately to upward deviations from forecasted public deficits. This hypothesis is tested using a data set from Galician municipalities during the period 1985-1995. Econometric estimates demonstrate that single-party majority incumbents are less likely to change forecasted budgets. Moreover, upward deviations in the deficit tend to increase in election years. Incumbent’s ideology is not relevant to explain deviations in deficit.

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