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Do Coalitions Really Cause Larger Government Expenditures? – Mixed Evidence from a Regression Discontinuity Design

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  • Sebastian Garmann

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    Abstract

    This paper measures the causal effect of coalition vs. single-party governments on fiscal policies using a data set of 396 municipalities in the German state of North Rhine-Westphalia in the time period 1985-2004. Using a regression discontinuity design to take the endogeneity of the type of government into account, we exploit a discontinuity that comes through the change from a coalition to a single-party government at 50% of the seat share of the strongest party. Our results point to a significant effect of the type of government on personnel expenditures, while we do not find significant results for material spending and investment expenditures. These results differ substantially from simple OLS estimates.

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    File URL: http://repec.rwi-essen.de/files/REP_12_339.pdf
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    Bibliographic Info

    Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0339.

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    Length: 38 pages
    Date of creation: May 2012
    Date of revision:
    Handle: RePEc:rwi:repape:0339

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    Related research

    Keywords: Legislative organization; regression discontinuity design; local fi scal policy; coalition governments; government spending; panel data;

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