Political cycles: Do the politics buy their voters' ballots with higher expenditures?

The present thesis is concerned with the existence of political cycles in European Union member states between 1990 and 2013. These cycles are of two types: political business cycles and political budget cycles. The analysis was performed by means of the fixed effects method (using first differences) along with a visual analysis of data. The results obtained from three types of data sets show that two years before elections, inflation grows at 0.47%, unemployment rate at 0.5%, and structural balance at 0.8%. One of the data sets reveals that structural balance is reduced by 0.39% in election years. The visual analysis clearly demonstrates that there exist political business cycles in Belgium, Bulgaria, Czech Republic, Denmark, Germany, Poland and Sweden. Political budget cycles have been proven to exist in Belgium, France, Cyprus, Malta, Germany, Slovakia and the United Kingdom