Essays on Economic Policy (ESPE in Spanish) - Political Transfer Cycles rom the Centre to the States
En la revista Ensayos sobre Política Económica (ESPE) divulgamos los resultados y las propuestas de política que surgen de investigaciones académicas realizadas en el Banco de la República. Cuando nos lea, tenga siempre presente que el contenido de nuestros artículos, así como los análisis y conclusiones que de ellos se derivan, son exclusiva responsabilidad de sus autores. El material divulgado en nuestra revista ESPE no compromete ni representa la opinión del Banco de la República ni la de su Junta Directiva.
In the journal Ensayos sobre Política Económica - ESPE - we disclose the results and policy proposals that arise from academic research carried out at the Banco de la República. When you read us, always keep in mind that the content of our articles, as well as the analyzes and conclusions derived from them, are the sole responsibility of their authors. The material disclosed in our ESPE magazine does not compromise or represent the opinion of Banco de la República or that of its Board of Directors.
Abstract
Using the pooled-mean group method (PMG), this paper attempts to trace the political transfer cycles in parliamentary and assembly elections in India from 1980-81 to 2010-11. It is found that the political transfer cycles are more pronounced in the year before parliamentary elections and in the year of assembly elections in the case of loans from the centre. Furthermore, from the binary Logit specification it is established that opportunistic manipulations of grants from the centre, in the year before parliamentary elections and the levels of loans from the centre in the year of assembly elections can help the incumbent regain its power. Inflation is found to be electorally harmful for the incumbent as it increases the likelihood of losing the election at union level, but not necessarily at state level. Similarly, a right-wing government is more likely to win the election, whereas, if the centre and the states have the same government or if the state government is an ally, the possibility of retaining power for the union government is lowered, and it is raised in the case of state-level governments. Furthermore, a coalition government, in general, reduces the possibility of winning in both parliamentary and state elections.
