Macroeconomic impact of harmonizing electoral cycles. Evidence from India
This paper examines the macroeconomic implications of harmonizing electoral cycles in India. We employ India’s own historical experience when national and state elections were held simultaneously. Using the variation between cases of synchronous and non-synchronous elections nationally and within states, our findings suggest comparatively high economic growth at both national and state-levels, following episodes of synchronized elections, compared to periods of non-synchronized election cycles. The findings are consistent with relatively higher post-election government expenditure, higher capital compared to revenue spending, and higher overall investment. Potential mechanisms for these findings could include direct channels such as lesser disruption in economic activity from less frequent elections, but possibly more importantly indirect channels operating through lower uncertainty. Overall, the results imply that the synchronicity of election cycles can have far reaching economic effects, beyond simply looking at administrative costs and logistics of conducting elections. The paper highlights the criticality of political economy and electoral cycles for emerging markets to transition into an advanced economy. The results could also be relevant for broader international debates on benefits from political unions, specifically, in the case of Europe.