ABSTRACT
This chapter has two main objectives. At first, it investigates whether governments in Greece during the pre-election periods pursue opportunistic policies in order to maximize their chances of reelection, a phenomenon called “political economic cycles” and more specifically “political budget cycles” and, if so, to estimate the extent of the phenomenon. The second objective is to investigate the effectiveness of European mechanisms in the control of political budget cycles in the Greek case. This task was possible since Greece has been subjected to the corrective arm of the Stability and Growth Pact, the so-called “Excessive Deficit Procedure”, for a total period of thirteen years. The main findings of this chapter are, first, that the Greek economy has been characterized by large electorally motivated budget cycles, and second, that the corrective fiscal measures imposed by the European Institutions in the face of the Greek debt crisis suppressed significantly pre-electoral fiscal policy manipulations. This outcome provides an example of how effective European Institutions can be in promoting fiscal discipline in the member states.
