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Do bailouts buy votes? Evidence from a panel of Hessian municipalities

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  • Thushyanthan Baskaran

Abstract

I study whether bailouts of local governments carry electoral benefits for state governments with a dataset covering 421 municipalities in the German state of Hesse over the period 1999–2011. I find that past bailouts have no economically significant effect on the municipality-level vote share of the parties that formed the state government in subsequent state elections. On the other hand, bailouts lead to vote increases for the ruling parties in subsequent local elections. On balance, these results suggest that electoral concerns are not the reason why central governments find it difficult to commit to a no-bailout policy. Copyright Springer-Verlag Berlin Heidelberg 2013

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  • Thushyanthan Baskaran, 2013. "Do bailouts buy votes? Evidence from a panel of Hessian municipalities," Economics of Governance, Springer, vol. 14(3), pages 257-278, August.
    • Handle: RePEc:spr:ecogov:v:14:y:2013:i:3:p:257-278
    DOI: 10.1007/s10101-013-0128-z
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    Cited by:

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    2. Thushyanthan Baskaran & Zohal Hessami, 2017. "Political alignment and intergovernmental transfers in parliamentary systems: evidence from Germany," Public Choice, Springer, vol. 171(1), pages 75-98, April.
    3. Baskaran, Thushyanthan, 2014. "Bailouts and austerity," University of Göttingen Working Papers in Economics 212, University of Goettingen, Department of Economics.
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    5. Baskaran, Thushyanthan, 2014. "The political economy of special needs transfers: Evidence from Bavarian municipalities, 1993-2011," University of Göttingen Working Papers in Economics 211, University of Goettingen, Department of Economics.

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    More about this item

    Keywords

    Subnational bailouts; State-level elections; Local fiscal policy; H30; H74; H77; D72;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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