Political Budget Cycles in the Philippines: Evidence from Subnational Fiscal Data

This paper documents patterns consistent with political budget cycles in the Philippines using provincial fiscal data from the Bureau of Local Government Finance for 81 provinces from 2012 to 2022, spanning four local elections. We examine how the level and composition of government spending, as well as provincial fund balances, change in the year preceding elections. Using fixed effects and restricted-instrument dynamic panel GMM estimates, with the CPI interaction evaluated at the sample-mean CPI, we find a positive total-spending association in difference GMM and positive fixed-effects associations for education spending and capital outlay. The evidence does not support pre-election increases in social welfare spending or fund balances. These findings provide qualified subnational evidence consistent with political budget cycle incentives while highlighting the additional political variation required for causal tests.