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Mr. Jan-Peter Olters

would, owing to increasing inflation (expectations), limit the political options over time, thereby opening the door for the types of strategie approaches suggested in Nordhaus (1975) and MacRae (1977) . 39 Through their exhaustive econometric study, Goodhart and Bhansali (1970) were able to demonstrate the existence of a popularity cycle for the incumbent government 40 and of a considerable time lag of four to six months before changes in the economic variables appeared to affect government popularity. In conclusion, however, they cautioned their readers and

Mr. Sanjeev Gupta, João Tovar Jalles, Mr. Carlos Mulas-Granados, and Michela Schena
This paper analyses the causes and consequences of fiscal consolidation promise gaps, defined as the distance between planned fiscal adjustments and actual consolidations. Using 74 consolidation episodes derived from the narrative approach in 17 advanced economies during 1978 – 2015, the paper shows that promise gaps were sizeable (about 0.3 percent of GDP per year, or 1.1 percent of GDP during an average fiscal adjustment episode). Both economic and political factors explain the gaps: for example, greater electoral proximity, stronger political cohesion and higher accountability were all associated with smaller promise gaps. Finally, governments which delivered on their fiscal consolidation plans were rewarded by financial markets and not penalized by voters.
Ludger Schuknecht
The paper studies empirically fiscal policies around elections in 35 developing countries. It finds that governments try to improve their reelection prospects with the help of expansionary expenditure policies. Rising fiscal deficits before elections are followed by fiscal consolidation afterwards. These cycles can be found particularly in countries which are less trade-oriented or which pursue fixed exchange rate policies. Certain IMF-supported programs (SAF/ESAF and EFF arrangements) contribute to fiscal stabilization, but they do not appear to affect the incidence of fiscal cycles. The paper concludes that policy advice and macroeconomic projections should not overlook election constraints, and political feasibility of reforms should be strengthened particularly before elections.
Mr. Sanjeev Gupta

considers simultaneously the role of three political factors (electoral proximity, political strength, and institutional accountability) in explaining consolidation promise gaps; and third, it examines the consequences of promise gaps on market sentiment and government popularity among the electorate. The remainder of the chapter is organized as follows; the second section briefly discusses the data and the definition of the dependent variable. The third section explores the economic and political causes of consolidation promise gaps. The fourth section looks into the

Mr. Jan-Peter Olters
Whereas the economics discipline possesses a highly refined theoretical apparatus to analyze the effects of government behaviour on the economy, it has not (yet) managed to fully develop a positively formulated "economic theory of politics" that would permit the integration of the decision-making processes of voters, parties and governments with those of consumers and firms. Considerable recent advances notwithstanding, the large and heterogeneous body of literature has (so far) remained outside the economic mainstrain. The paper surveys the main approaches used to endogenize democratic elements and assesses the underlying reasons for researchers' renewed interest in this field.
Davide Furceri, Michael Ganslmeier, and Mr. Jonathan David Ostry
Are policies designed to avert climate change (Climate Change Policies, or CCPs) politically costly? Using data on governmental popular support and the OECD’s Environmental Stringency Index, we find that CCPs are not necessarily politically costly: policy design matters. First, only market-based CCPs (such as emission taxes) generate negative effects on popular support. Second, the effects are muted in countries where non-green (dirty) energy is a relatively small input into production. Third, political costs are not significant when CCPs are implemented during periods of low oil prices, generous social insurance and low inequality.
International Monetary Fund
In the conclusion of the previous Article IV Consultation, Executive Directors welcomed the elimination of quantitative import restrictions and the liberalization of foreign exchange regulations, and Directors emphasized the need to consolidate the progress made in containing the fiscal imbalances by continuing with prudent expenditure policies and further strengthening the tax system and budgetary procedures. Fiscal slippages occurred in the second half of 1999 and led to pressures on the balance of payments. Structural reforms created an environment conducive to private sector activity.
Mr. Sanjeev Gupta, João Tovar Jalles, Mr. Carlos Mulas-Granados, and Michela Schena

political factors (electoral proximity, political strength and institutional accountability) in explaining consolidation promise gaps; and third, it looks at the consequences of promise gaps on market sentiment and governmentspopularity among the electorate. The remainder of the paper is organized as follows. Section 2 briefly discusses the data and the definition of our dependent variable. Section 3 explores the economic and political causes of consolidation promise gaps. Section 4 looks into the reaction of markets and the electorate to these gaps, and the

Ms. Era Dabla-Norris and Ms. Aleksandra Zdzienicka

) reforms from 1973 to 2014. We then examined electoral outcomes such as reelection of the incumbent government party, its leader (usually the prime minister, or the president in presidential regimes), or the percentage of votes the incumbent government party received when reelected. We controlled for a wide range of other economic and political factors (for example, government popularity at the time of reforms, parliamentary support for the government), other country-specific characteristics, and global shocks that could affect reelection outcomes. Voters indeed seem