Has trade openness already voted? A panel data study

Abstract

This paper investigates political budget cycles in the course of increasing trade openness. The data set covers up to sixty countries between 1960 and 2006. The results suggest that trade openness influences political budget cycles, so the trade-openness pattern of an economy must be considered; trade openness promotes greater exposure of young democracies to globalization forces so that international organizations such as the International Monetary Fund or the World Bank can more efficiently monitor and influence young democracies rather than old democracies; and established regimes should focus internally to flatten their budget cycles through control of corruption, fiscal illusions, and politicians' opportunism.