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Government spending and re-election: Quasi-experimental evidence from Brazilian municipalities

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  • Stephan Litschig

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  • Kevin Morrison

Abstract

Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population cutoffs over the period 1982-1985. We show that extra fiscal transfers resulted in a 20% increase in local government spending per capita, and an increase of about 10 percentage points in the re-election probability of local incumbent parties. In the context of an agency model of electoral accountability, as well as existing results indicating that the revenue jumps studied here had positive impacts on education outcomes and earnings, these results suggest that expected electoral rewards encouraged incumbents to spend additional funds in ways that were valued by voters.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/1233.pdf
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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1233.

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Date of creation: Jun 2010
Date of revision: Jun 2012
Handle: RePEc:upf:upfgen:1233

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Web page: http://www.econ.upf.edu/

Related research

Keywords: Government spending; voting; regression discontinuity.;

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  1. Albert Solé-Ollé & Pilar Sorribas-Navarro, 2008. "Does partisan alignment affect the electoral reward of intergovernmental transfers?," Working Papers 2008/2, Institut d'Economia de Barcelona (IEB).
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Cited by:
  1. Laura Bianchini & Federico Revelli, 2011. "Green polities: urban environmental performance and government popularity," Working Papers 2011/18, Institut d'Economia de Barcelona (IEB).
  2. Felix Arnold & Ronny Freier, 2013. "Signature Requirements and Citizen Initiatives: Quasi-Experimental Evidence from Germany," Discussion Papers of DIW Berlin 1311, DIW Berlin, German Institute for Economic Research.
  3. Florian Ade & Ronny Freier, 2011. "When Can We Trust Population Thresholds in Regression Discontinuity Designs?," Discussion Papers of DIW Berlin 1136, DIW Berlin, German Institute for Economic Research.

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