Volume 8, Issue 30 (3-2018)                   jemr 2018, 8(30): 7-42 | Back to browse issues page

XML Persian Abstract Print


Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:

Amiri H, Samadian F. The Impact of Political Cycles on Construction Projects: A Case Study of Provinces in Iran. jemr. 2018; 8 (30) :7-42
URL: http://jemr.khu.ac.ir/article-1-1604-en.html
Abstract:   (626 Views)
Construction projects are the basic requirements of sustainable development and growth. Inefficient procedures of implementing the construction projects, regardless of our financial and administrative capacities, has imposed a large amount of unfinished and occasionally stopped projects to national economy. Since there are various components that affect the fate of projects, therefore, the main purpose of this paper is to answer this question that whether the political cycles affect the adoption and implementation of provincial construction projects or not? In order to answer this question, two hypotheses are considered in this paper. Therefore, GMM dynamic method was used to estimate the model and test hypothesis in the years 1997-2014. Hypothesis one: political cycles affect the fate of construction projects, and the second hypothesis: the impact of political cycles on the adoption and implementation of construction projects are larger in the year prior to political cycle (election). Therefore, in order to estimate the model and test the research hypothesis, provincial data during the years was used. Results of testing two hypotheses suggest that parliamentary and presidential political cycles have a significant positive correlation with the construction projects. Results also show that the presidential political cycle has a larger impact on construction projects, meaning that the impact of political cycles on the process of adopting and implementing the construction projects in the year prior to the political cycle is larger. In this regard, in order to eliminate the impacts of the governmental and parliamentary political cycle on construction projects, it is recommended to determine a competent authority that has the necessary qualifications as well as the sufficient degree of independence and supervision power over the project's Feasibility studies. The referenced mentioned will be approve projects based on objective justification-technical and district-based studies and it prevents the adoption of development plans based on the political considerations of the government and parliamentarians.
Full-Text [PDF 995 kb]   (201 Downloads)    
Type of Study: Applicable | Subject: بخش عمومی
Received: 2017/06/11 | Accepted: 2017/12/20 | Published: 2018/03/6

References
1.  Aidt, T., Veiga, F., and Veiga, L. (2011). Election results and opportunistic policies: A new test of the rational political business cycle model. Public Choice, 148:21–44.
2.  Akhmedov, A. and Zhuravskaya, E. (2004). Opportunistic political cycles: test in a young democracy setting. The Quarterly Journal of Economics, 119:1301–1338.
3.  Arellano, M., and S. R. Bond (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations, Review of Economic Studies, 58, 277–297.
4.  Arellano, M., and O. Bover (1995). Another look at the instrumental variables estimation of error-components models, Journal of Econometrics, 68, 29–51.
5.  Baltagi, B. H. (2008). Econometric Analysis of Panel Data, 4th Ed. New York: John Wiley & Sons. https://doi.org/10.1007/978-3-540-75892-1_3 [DOI:10.1007/978-3-540-75892-1_16]
6.  Binet, M. and Pentecote, J. (2004). Tax digression and the political budget cycle in French municipalities. Applied Economics Letters, 11(14):905–908.
7.  Block, S. (2002). Political business cycles, democratization, and economic reform: the case of Africa. Journal of Development Economics, 67(1):205–228.
8.  Blundell, R. and Bond, S. (1998), Initial conditions and moment restrictions in dynamic panel data models, Journal of Econometrics, 87, 115-143.
9.  Brender, A. (2003). The effect of fiscal performance on local government election results in Israel: 1989–1998. Journal of Public Economics, 87:2187–2205.
10.  Brender, A. and Drazen, A. (2008). How do budget deficits and economic growth affect reelection prospects? Evidence from a large panel of countries. The American Economic Review, 87:2203–2220.
11.  Drazen, A. and Eslava, M. (2010). Electoral manipulation via voter-friendly spending: Theory and evidence. Journal of Development Economics, 92:39–52.
12.  Efthyvoulou, G. (2012). Political budget cycles in the European :::::union::::: and the impact of political pressures. Public Choice, 153(3-4):295–327.
13.  Eslava, M. (2005). Political budget cycles or voters as fiscal conservatives? Evidence from Colombia. Documents cede 2005-12.
14.  Fair, R. (1978), the Effect of Economic Events on Votes for PRESIDENT, Review of Economics and Statistics, 60, 159-72.
15.  Foremny, D. and Riedel, N. (2012). Business taxes and the electoral cycle. Document de Treball, IEB 2012/3.
16.  Foucault, M., Madies, T., and Paty, S. (2008). Public spending interactions and local politics. Empirical evidence from French municipalities. Public Choice, 137:57–80.
17.  Galli, E. and Rossi, S. (2002). Political budget cycles: the case of the western German lander. Public Choice, 110(3):283–303.
18.  Ghasemi, M., Panahi, A., Khezri, M. and Mokhber, A (2009). Budgeting in Iran (budget and executives), Tehran, Islamic Consultative Research Center, Office of Studies and Programs and Budget [in Persian].
19.  Gonzalez, M. (2002). Do changes in democracy affect the political budget cycle? Evidence from Mexico. Review of Development Economics, 6(2):204–224.
20.  Hallaj, Sh., and Jalali Mosavi, A. (2011). Study of the status of development plans and the provision of priority criteria as the main approach, Islamic Consultative Research Center, Office of Studies and Programs and Budget, Number 10306 [in Persian].
21.  Harris, R. D. F. and Tzavalis, E. (1999). Inference for unit roots in dynamic panels where the time dimension is fixed. Journal of Econometrics, 91: 201–226.
22.  Im, K.S., Pesaran, M.H. and Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115: 53–74.
23.  Jones, M. P., Meloni, O., and Tommasi, M. (2012). Voters as fiscal liberals: Incentives and accountability in federal systems. Economics & Politics, 24(2):135–156.
24.  Katsimi, M. and Sarantides, V. (2012). Do elections affect the composition of fiscal policy in developed, established democracies? Public Choice, 151(1):325–362.
25.  Khemani, S. (2004). Political cycles in a developing economy: effect of elections in the Indian states. Journal of Development Economics, 73(1):125–154.
26.  Khezri, M. (2006). Rents Economy (Reviewing the Rent in the Budgeting System of Iran), Publications Management and Planning Organization [in Persian].
27.  Klomp, J. and De Haan, J. (2013). Do political budget cycles really exist? Applied Economics, 45(3):329–341.
28.  Kordbache, M. (2007). Budgeting in Iran, Tehran, Publications Management and Planning Organization [in Persian].
29.  Kraemer, M. (1997). Electoral budget cycles in Latin America and the Caribbean: incidence, causes, and political futility. IDB Working Paper, n.291. [DOI:10.2139/ssrn.1815980]
31.  Lago-Penas, I. and Lago-Penas, S. (2008). Explaining budgetary indiscipline: Evidence from Spanish municipalities. Public Finance and Management, 8(1):36–69.
32.  Levin, A., Lin, C.F. and Chu, C.S.J. (2002). Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108:1–24.
33.  Lewis-Beck, M. (1988), Economics and Elections. University of Michigan PRESS
34.  Litschig, S. and Morrison, K. (2012). Government spending and re-election: quasi-experimental evidence from Brazilian municipalities. Barcelona GSE Working Paper Series, WP n.515.
35.  Madsen, H. (1980), Electoral Outcomes and Macroeconomic Policies: The Scandinavian Cases, in P. Whitely, ed., Models of Political Economy, London, 15-46.
36.  Management and Planning Organization (2015), Supervisory reports of provincial development projects during 2010-2015 [in Persian].
37.  Meloni, O. (2001). Gobernadores y elecciones: ¿Es "negocio" ser austero? Evidencia a partir de datos de panel. XXXVI Reunión Anual de la AAEP.
38.  Mourao, P. and Veiga, L. (2010). Elections, fiscal policy and fiscal illusion. NIPE Working Paper 18/2010. Universidade do Minho. [DOI:10.2139/ssrn.1656631]
40.  Pedroni, P. 2004. Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20: 597–625. [DOI:10.1017/S0266466604203073]
42.  Peltzman, S. (1992). Voters as fiscal conservatives. The Quarterly Journal of Economics, 107(2):327– 361.
43.  Persson, T. and G. Tabellini (2002), Do Electoral Cycles Differ Across Political Systems? Working paper.
44.  Sadeqi Shahedani, M. and Aghajani Mehmar, E. (2016). The effect of relative financial decentralization on Iran's regional economic growth, Quarterly Journal of Economic Modeling Research, 5(20): 159-191 [in Persian].
45.  Sakurai, S. and Menezes-Filho, N. (2008). Fiscal policy and reelection in Brazilian municipalities. Public Choice, 137:301–314.
46.  Sakurai, S. and Menezes-Filho, N. (2011). Opportunistic and partisan election cycles in Brazil: new evidence at the municipal level. Public Choice, 148:233–247.
47.  Schuknecht, L. (2000). Fiscal policy cycles and public expenditure in developing countries. Public Choice, 102(1):115–130.
48. ♣ Sedmihradska, L., Kubik, R., and Haas, J. (2011). Political business cycle in Czech municipalities. Prague Economic Papers, 2011:59–70. [DOI:10.18267/j.pep.387]
49.  Shahabadi, A., Naziri, M.K. and Nilforoshan, N. (2013). Effects of electoral cycles on growth of public health expenditures in selected and developing countries (1994-2010), Quarterly Journal of Economic Modeling Research, 3(9): 95-116 [in Persian].
50.  Shi, M. and J. Svensson (2002), Political Budget Cycles, American Economic Review, 80, 21-36.
51.  Tavakoli, A. (2008). What to do with unfinished construction plans, Economic Research, 7(3): 42-58 [in Persian].
52.  Tufte, E. (1978), Political Control of the Economy, Princeton NJ: Princeton University Press.
53.  Veiga, L. G. and Veiga, F. J. (2007a). Does opportunism pay off? Economics Letters, 96:177–182.
54.  Veiga, L. G. and Veiga, F. J. (2007b). Political business cycles at the municipal level. Public Choice, 131:45–64.
55.  Vergne, C. (2009). Democracy, elections and allocation of public expenditures in developing countries. European Journal of Political Economy, 25(1):63–77.
56.  Vicente, C., Benito, B., and Bastida, F. (2013). Transparency and political budget cycles at municipal level. Swiss Political Science Review, 19(2):139–156.
57.  Vila, J. (2010). Endeudamiento, gastos de inversión, y ciclo político presupuestario en las haciendas locales. El caso de los ayuntamientos valencianos. In XVII Encuentro de Economía Pública, Murcia.

Add your comments about this article : Your username or Email:
CAPTCHA code

Send email to the article author


© 2018 All Rights Reserved | Journal of Economic Modeling Research

Designed & Developed by : Yektaweb