Now or Later? The Political Economy of Public Investment in Democracies

This paper explores the impact of political and institutional variables on public investment.Working with a sample of 80 presidential and parliamentary democracies between 1975 and2012, we find that the rate of growth of public investment is higher at the beginning ofelectoral cycles and decelerates thereafter. The peak in public investment growth occursbetween 21 and 25 months before elections. Cabinet ideology and government fragmentationinfluence the size of investment booms. More parties in government are associated withsmaller increases in public investment while left-wing cabinets are associated with highersustained increases in investment. Stronger institutions help attenuate the impact of electionson investment, but available information is insufficient to draw definitive conclusions.