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Do re-election probabilities influence public investment?

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  • Jon H. Fiva

    ()
    (University of Oslo)

  • Gisle James Natvik

    ()
    (Norges Bank)

Abstract

We identify exogenous variation in incumbent policymakers’ re-election probabilities and explore empirically how this variation affects their investments 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.

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Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2009/36.

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Length: 54 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:ieb:wpaper:2009/12/doc2009-36

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Keywords: Political economics; strategic capital accumulation; identifying popularity shocks.;

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Citations

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Cited by:
  1. Michael Funke & Yu-Fu Chen, 2009. "Booms, Recessions and Financial Turmoil: A Fresh Look at Investment Decisions under Cyclical Uncertainty," Quantitative Macroeconomics Working Papers 20908, Hamburg University, Department of Economics.
  2. Marina Azzimonti, 2011. "The dynamics of public investment under persistent electoral advantage," Working Papers 11-23, Federal Reserve Bank of Philadelphia.
  3. Albert Solé-Ollé & Elisabet Viladecans-Marsal, 2010. "Lobbying, political competition, and local land supply: recent evidence from Spain," Working Papers 2010/45, Institut d'Economia de Barcelona (IEB).
  4. Fossen, Frank M. & Freier, Ronny & Martin, Thorsten, 2014. "Race to the debt trap? Spatial econometric evidence on debt in German municipalities," Discussion Papers 2014/1, Free University Berlin, School of Business & Economics.

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