Elections related cycles in publicly supplied goods in Albania

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Political Business Cycles (PBC), introduced by Nordhaus (1975), refer to the manipulation of economic conditions by governments to gain electoral advantage through fiscal and monetary instruments. Governments may increase public expenditures and improve the production/supply of certain goods before elections to boost growth and reduce unemployment. In Albania, the electricity supply, controlled by the publicly run KESH (Korporata Energjitike Shqiptare), has been characterized by instability and systematic interruptions, impacting households and businesses reliant on electricity for heating and cooking. This creates an incentive for the government to leverage electricity provision as a means to impress voters ahead of elections, alongside traditional expenditure strategies. This paper investigates the consumption, production, and import of electricity in Albania, hypothesizing that electricity consumption may rise above normal levels before elections and contract afterward. Using a modern econometric approach, specifically ARMA modeling, we aim to determine if elections significantly explain changes in electricity production, alongside historical data and random error terms.