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Government Spending and Re-election: Quasi-Experimental Evidence from Brazilian Municipalities

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  • Stephan Litschig
  • Kevin M 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.

Suggested Citation

  • Stephan Litschig & Kevin M Morrison, 2012. "Government Spending and Re-election: Quasi-Experimental Evidence from Brazilian Municipalities," Working Papers 515, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:515
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    1. 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.
    2. Dey, Subhasish & Sen, Kunal, 2016. "Is Partisan Alignment Electorally Rewarding? Evidence from Village Council Elections in India," IZA Discussion Papers 9994, Institute of Labor Economics (IZA).
    3. Tiago Cisalpino Pinheiro & Marcelo Araújo Castro, 2016. "Fiscal Federalism And Electoral Choice In Brazilian Municipalities," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 071, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    4. Stöhlker, Daniel, 2019. "Quality of Local Public Good Provision and Electoral Support," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203592, Verein für Socialpolitik / German Economic Association.
    5. Castro, Marcelo Araújo & Mattos, Enlinson & Patriota, Fernanda, 2016. "Spatial spillovers and political coordination in public health provision," Textos para discussão 417, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    6. Voth, Hans-Joachim & Voigtländer, Nico, 2014. "Highway To Hitler," CEPR Discussion Papers 9983, C.E.P.R. Discussion Papers.
    7. Dragan Filipovich & Miguel Niño-Zarazúa & Alma Santillán Hernández, 2018. "Campaign externalities, programmatic spending, and voting preferences in rural Mexico: The case of Progresa-Oportunidades-Prospera programme," WIDER Working Paper Series wp-2018-27, World Institute for Development Economic Research (UNU-WIDER).
    8. Dragan Filipovich & Miguel Niño-Zarazúa & Alma Santillán Hernández, 2018. "Campaign externalities, programmatic spending, and voting preferences in rural Mexico: The case of Progresa-Oportunidades-Prospera programme," WIDER Working Paper Series 027, World Institute for Development Economic Research (UNU-WIDER).
    9. Fuchs, Alan & Rodriguez-Chamussy, Lourdes, 2014. "Voter response to natural disaster aid : quasi-experimental evidence from drought relief payments in Mexico," Policy Research Working Paper Series 6836, The World Bank.
    10. Balaguer-Coll, Maria Teresa & Brun-Martos, María Isabel & Forte, Anabel & Tortosa-Ausina, Emili, 2015. "Local governments' re-election and its determinants: New evidence based on a Bayesian approach," European Journal of Political Economy, Elsevier, vol. 39(C), pages 94-108.
    11. Laura Bianchini & Federico Revelli, 2013. "Green Polities: Urban Environmental Performance and Government Popularity," Economics and Politics, Wiley Blackwell, vol. 25(1), pages 72-90, March.
    12. Maria Teresa Balaguer-Coll & María Isabel Brun-Martos & Anabel Forte & Emili Tortosa-Ausina, 2014. "Determinants of local governments'­ reelection: New evidence based on a Bayesian approach," Working Papers 2014/06, Economics Department, Universitat Jaume I, Castellón (Spain).
    13. Felix Arnold & Ronny Freier, 2015. "Signature requirements and citizen initiatives: Quasi-experimental evidence from Germany," Public Choice, Springer, vol. 162(1), pages 43-56, January.
    14. García, Israel & Hayo, Bernd, 2021. "Political budget cycles revisited: Testing the signalling process," European Journal of Political Economy, Elsevier, vol. 69(C).
    15. Marcelo Araújo Castro, 2016. "Using A Quasi-Experiment To Identify The Effects Of Education Spending On School Quality," Anais do XLIII Encontro Nacional de Economia [Proceedings of the 43rd Brazilian Economics Meeting] 221, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    16. Laura Bianchini & Federico Revelli, 2013. "Green Polities: Urban Environmental Performance and Government Popularity," Economics and Politics, Wiley Blackwell, vol. 25(1), pages 72-90, March.
    17. Henriksen, Alexandre Lauri & Zoghbi, Ana Carolina & Tannuri-Pianto, Maria & Terra, Rafael, 2022. "Education outcomes of broadband expansion in Brazilian municipalities," Information Economics and Policy, Elsevier, vol. 60(C).
    18. Andrew C. Eggers & Ronny Freier & Veronica Grembi & Tommaso Nannicini, 2018. "Regression Discontinuity Designs Based on Population Thresholds: Pitfalls and Solutions," American Journal of Political Science, John Wiley & Sons, vol. 62(1), pages 210-229, January.
    19. Labonne, Julien, 2013. "The local electoral impacts of conditional cash transfers," Journal of Development Economics, Elsevier, vol. 104(C), pages 73-88.
    20. Silva-Escobar, Daniel, 2022. "Conducta electoral oportunista y determinantes económicos de la reelección de alcaldes/as en Chile," Documentos de Trabajo 10, Estudios Nueva Economía.
    21. 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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    More about this item

    Keywords

    government spending; voting; regression discontinuity;
    All these keywords.

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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