Abstract:

All industrial economies have been experienced significant fiscal policy cycle in their economic process. Related with these cycles, the paper is about basic level study about fiscal policies around elections within restricted theoretical background. Both political and budget cycles have crucial rules for understanding cyclical effects of fiscal policy around elections as well. That’s why; this paper could be focused given basic literature related with these subjects. In this paper, the main argument is uncertainty about remaining in power results in increased fiscal spending, which in turn distorts incentives by pushing individuals away from productive work to rent-seeking activities; then, distorted incentives affect growth. Finally, policy uncertainty as measured by the variability of government capacity will be reason of instability conditions as a whole.

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