Doctoral dissertation focuses on the analysis of the impact of incumbents and voters on the political budget cycle (PBC) in 9 EU member states: Austria, Germany, Spain, Czech Republic, Croatia, Slovak Republic, Italy, Netherlands and Sweden, in the time period 1995-2012. The main motivation of this dissertation was to understand what are the underlining reasons of budget deficits that appear in the election year. The empirical strategy went even further in order to exactly identify on which budget level (general, central or regional) the budget deficit, that is present at the general government level, appears. In order to take into account all control variables, the dissertation also took into consideration various levels of fiscal (de)centralisation, administrative arrangements as well as whether countries in the sample are “old” or “new” EU member states. Two main research objectives were set in the dissertation. The first objective was to theoretically present and identify roles that incumbents and voters have in creating PBCs on the national and regional levels. Thus, in the theoretical part of dissertation foundations of public choice theory, political economy of budget deficit, political-business cycles and political-budget cycles were presented. The second research objective was empirically oriented. Based on the theoretical foundations of incumbents and voters behaviour, i.e. their wish to maximize their respective utility functions, two equations were written and econometrically tested in STATA. The first one concerning incumbents and their goal of maximizing re-election and the second one that tested economic theory of voting in order to see whether voters maximize their utility in the election period. Also, additional research goal was to determine what is the optimal model of political budget cycle for the countries in the sample based on the presented model of political budget cycles and the obtained empirical results.