Do Re-election Probabilities Influence Public Investment?

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Do Re-election Probabilities Influence Public Investment?

Author Info

Fiva, Jon H. () (Dept. of Economics, University of Oslo)
Natvik, Gisle James () (Norges Bank)

Additional information is available for the following registered author(s):

Gisle James Natvik

Abstract

We identify exogenous variation in incumbent policymakers’ re-election probabilities and explore empirically how this variation affects the incumbents’ investment in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes preferred more strongly by the incumbents. This aligns with a theoretical framework where political parties disagree about which public goods to produce using labor and predetermined public capital. Key for the consistency between data and theory is to account for complementarity between physical capital and flow variables in government production.

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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 16/2009.

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Length: 49 pages
Date of creation: 15 Aug 2009
Date of revision:
Handle: RePEc:hhs:osloec:2009_016

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Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
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Paper
- Jon H. Fiva & Gisle James Natvik, 2009. "Do Re-election Probabilities Influence Public Investment?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
- Jon H. Fiva & Gisle James Natvik, 2009. "Do re-election probabilities influence public investment?," Working Paper 2009/13, Norges Bank. [Downloadable!]

Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H40 - Public Economics - - Publicly Provided Goods - - - General
H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-09-11 (All new papers)
NEP-CDM-2009-09-11 (Collective Decision-Making)
NEP-MAC-2009-09-11 (Macroeconomics)
NEP-PBE-2009-09-11 (Public Economics)
NEP-POL-2009-09-11 (Positive Political Economics)

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