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We use real-time annual data on the fiscal balance, government current spending, current revenues and net capital outlays as published at a half yearly frequency in the OECD Economic Outlook for 25 OECD countries. For each fiscal year t we have a number of forecasts, a first release, and subsequent revisions. It turns out that revisions in the fiscal balance data are not affected by elections. However, we do find that governments spend more than reported before an election which provides support for moral-hazard type of political budget cycle (PBC) models: through hidden efforts the incumbent tries to enhance his perceived competence. We also find that governments had higher current receipts than reported before an election, which is in line with adverse-selection type of PBC models in which incumbents signal competence through expansionary fiscal policy before the elections.

Using an improved definition and indicator of growth accelerations, we examine whether political regimes, regime changes, and economic reform are related to growth accelerations. Our results show that economic growth accelerations are preceded by economic reforms. Furthermore, we find that growth accelerations are more likely to happen after the start of a new political regime.

We examine the multidimensionality of political instability using 25 political instability indicators in an Exploratory Factor Analysis. We find that political instability has four dimensions: politically motivated violence, mass civil protest, instability within the political regime, and instability of the political regime. We examine the causal impact of political instability on economic growth using a dynamic panel system Generalized Method of Moments model and find that the four dimensions of political instability have different effects on economic growth. Only the instability of the political regime has a robust and significant negative effect on economic growth. [Copyright Elsevier B.V.]

We develop a model that studies the incentives of the ruling elite regarding the selection of the political leader. We show that it is optimal for the ruling elite to choose leaders with more military experience in a politically unstable regime while more educated leaders are preferred in politically stable regimes. Using a dataset that includes 1569 national leaders from 177 countries over the period 1946-2011, we find empirical evidence that political stability contributes to the selection of more educated leaders, while the reverse holds for leaders with high military ranks. The empirical findings are robust to different subsamples, various proxies for educational and military attainment, and different measures for political stability. Our results suggest that leader selection is another reason why political instability is harmful for economic growth.

We test the theory of expressive voting in relation to political ideology in a laboratory experiment. After deriving our hypotheses from a decision theoretic model, we examine voting decisions in an experiment in which we use the size of the electorate as the treatment variable. Using a Heckman selection model that includes both the electoral participation decision and voting choice decision, we find mixed results for the expressive voting hypothesis. In line with expressive voting, our findings suggest that non-ideological voters are more likely to abstain from voting than ideological voters especially when the electorate grows large. Concerning the voting choice decision between an equal but inefficient, and an unequal but efficient income distribution the evidence for expressive voting is mixed. We do find that voters with socialist (left wing) preferences behave expressively, but we do not find this effect for voters with capitalist (right wing) preferences.

We test the theory of expressive voting in relation to political ideology in a laboratory experiment. After deriving our hypotheses from a decision theoretic model, we examine voting decisions in an experiment in which we use the size of the electorate as the treatment variable. Using a Heckman selection model that includes both the electoral participation decision and voting choice decision, we find mixed results for the expressive voting hypothesis. In line with expressive voting, our findings suggest that non-ideological voters are more likely to abstain from voting than ideological voters – especially when the electorate grows large. Concerning the voting choice decision between an equal but inefficient, and an unequal but efficient income distribution the evidence for expressive voting is mixed. We do find that voters with socialist (left wing) preferences behave expressively, but we do not find this effect for voters with capitalist preferences.

We examine whether economic and military competence of political leaders affect their duration in office. We introduce leader heterogeneity in the selectorate theory of Bueno de Mesquita et al. (2003) and derive the hypothesis that in the presence of a revolutionary threat, economic competence is negatively related to political survival, but that the effect is moderated by the size of the winning coalition. As military and economic competence are negatively correlated, the opposite holds for military competence. We present empirical estimates using proxies for military and economic competence in a parametric Weibull duration model that support our theoretical predictions.

We examine whether economic and military competence of political leaders affect their duration in office. We introduce leader heterogeneity in the selectorate theory of Bueno de Mesquita et al. (2003) and derive the hypothesis that in the presence of a revolutionary threat, economic competence is negatively related to political survival, but that the effect is moderated by the size of the winning coalition. As military and economic competence are negatively correlated, the opposite holds for military competence. We present empirical estimates using proxies for military and economic competence in a parametric Weibull duration model that support our theoretical predictions.

We examine the impact of leadership change after a coup d'etat on economic growth. We consider successful coup attempts as our treatment group and use failed coup attempts as controls to condition on political instability. To take account of selection bias, we control for the determinants of coup success. Our main finding is that leadership changes after a coup d'état have a positive effect on economic growth in the least developed countries, but have a negative effect in other developing countries.