A couple of months before the Swedish election in 1998, the incumbent government distributed 2.3 billion SEK to 42 out of 115 applying municipalities. This was the first wave of a four-year long grant program intended to support local investment programs aimed at an ecological sustainable development. This temporary grant program differs from traditional intergovernmental grants in several aspects, most importantly in the sovereign decision making power given to the incumbent central government. In this paper we investigate whether there were any tactical motives behind the distribution of these grants. We find support for the hypothesis that the incumbent government used the grant program under study in order to win votes. In particular, we find strong support for the Lindbeck-Weibull/Dixit-Londregan model in which parties distribute transfers to regions where there are many swing voters. This result is statistically as well as economically significant. We do however not find any support for the model that predicts that the incumbent government transfer money to its own supporters.
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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number
1999:24.
Length: 33 pages Date of creation: 15 Dec 1999 Date of revision: Publication status: Published in American Political Science Review, 2002, pages 27-40. Handle: RePEc:hhs:uunewp:1999_024
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Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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