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Ideology and fiscal policy: quasi-experimental evidence from the German States

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  • Baskaran, Thushyanthan

Abstract

Is government ideology important for fiscal policy? I study this question with data from all German States over the period 1975-2005. To identify the effect of ideology, I rely on a fuzzy regression discontinuity design. I find that left-wing state governments spend more than state governments with right-wing and mixed ideology. Deficits of left-wing governments are larger than those of right-wing governments but smaller than those of governments with mixed ideology. These results are robust to sensitivity tests.

Suggested Citation

  • Baskaran, Thushyanthan, 2012. "Ideology and fiscal policy: quasi-experimental evidence from the German States," University of Göttingen Working Papers in Economics 144, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:144
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    Cited by:

    1. António Afonso & Maria João Guedes, 2014. "EU Finance Ministers, Capital Markets and Fiscal Outcomes," Working Papers Department of Economics 2014/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    2. CIUMARA, Tudor, 2016. "Political Ideology And Fiscal Policy. The Case Of Romania," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 20(2), pages 55-64.

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    More about this item

    Keywords

    government ideology; fiscal policy; fiscal federalism;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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