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Many studies have examined wheather democratic governments in industrial countries adjust the policy-mix around the election date to enhance their re-election prospects. For example, before an election the economy is stimulated with the help of fiscal or monetary policies. Resulting employment gains or wealth transfers increase the government’s popularity. After elections, contractionary policies are pursued to reduce inflation or the fiscal deficits. The result is a so-called political business cycle or, when just referring to the effects of elections on fiscal policies, a fiscal policy cycle. Over the past decade, democratization has transformed the governance structure in many developing countries. Many of the remaining autocracies of South America and AErica, and former socialist countries, have held free elections and established democratic institutions. However, so far mostly anecdotal evidence from newspapers or …