Political Cycles in Public Expenditure: Butter vs Guns

This paper presents a theoretical model and empirical evidence from 22 OECD countries to highlight how governments may use the tradeoff between social and military expenditure to advance their electoral and partisan objectives. Three basic results emerge. First, governments tend to bias outlays towards social expenditure and away from military expenditure at election times. Second, the strength of this cycle is smaller when we exclude countries involved in conflict, where national security plays an important role on voter choice. Third, while certain categories of social expenditure are higher during left administrations, military expenditure is higher during right administrations.