National elections and sub-national electoral cycles: Do strong fiscal rules matter in Europe?

We investigate Political Business Cycles (PBCs) during national elections across European Union countries and their sub-national regions, with a focus on the role of national and supranational fiscal rules. We show robust evidence of political budget cycles in both spending and taxation. Strong fiscal rules shape the form and timing of PBCs, but their disciplining effect is conditional on political incentives. Pre-election spending expansions are systematically curbed by strong rules, whereas their effect on taxation is asymmetric: they prevent opportunistic tax cuts by right-wing governments but are less binding for left-wing incumbents. Post-election partisan behavior is also evident, as left-wing governments tend to cut spending and raise taxes following leadership changes. Strong fiscal rules moderate these post-electoral adjustments, limiting abrupt fiscal corrections. Overall, fiscal rules do not simply reduce spending, rather, they reshape the composition and timing of fiscal policy. JEL Classification: D72; E62; H30; H71; H72; O52.