Political Budget Cycles in the Context of a Transition Economy: The Case of Albania

Abstract There is growing research on the political budget cycles in transition economies whose institutions, and societies differ significantly from those of developed countries. New democracies are more vulnerable to (fiscal) cycles. Most studies focus policy instruments (e.g. fiscal policies) rather than macroeconomic outcomes. In this paper, we analyse budget/fiscal cycle Albania, a post-communist country. We monthly data balance (deficit). The findings show strong difference deficits during pre- post-election quarters, which do not appear when econometric analysis replicated annually collapsed data. This paper highlights importance distinguishing between types elections according their Electoral competitiveness (heightened incumbents’ fear loss), lower management efficiency, incumbent’s carelessness about situation mandate rivals higher corruption can all be associated with that yield rotation (change party/coalition power), thus resulting deficit.