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The Effect of Fiscal Performance on Local Election Results in Israel: 1989-1998

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  • Adi Brender

    () (Bank of Israel)

Abstract

The results of the last three election campaigns in Israel’s local authorities are analyzed, to find whether the fiscal performance of local authority heads affected their reelection probability. We find that in the 1989 and 1993 campaigns fiscal performance did not affect voter preferences. However, in the 1998 campaign financial performance is found to be a good predictor of local authority head reelection. Changes in the political environment, the effective enforcement of audit and financial reporting requirements by the Ministry of the Interior, tougher imposition of hard budget constraints and the development of local media are proposed as possible explanations. The hypotheses that the fiscal variables reflect the income level at the locality or the success of the authority’s head in extracting resources from the central government are tested and rejected. The results are interpreted as suggesting that important progress has been made in Israel towards meeting critical preconditions for a more decentralized approach to local government.

Suggested Citation

  • Adi Brender, 1999. "The Effect of Fiscal Performance on Local Election Results in Israel: 1989-1998," Bank of Israel Working Papers 1999.04, Bank of Israel.
  • Handle: RePEc:boi:wpaper:1999.04
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    References listed on IDEAS

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    1. Rosen, Harvey S & Fullerton, David J, 1977. "A Note on Local Tax Rates, Public Benefit Levels, and Property Values," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 433-440, April.
    2. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
    3. Rosenberg, Jacob, 1992. "Rationality and the Political Business Cycle: The Case of Local Government," Public Choice, Springer, vol. 73(1), pages 71-81, January.
    4. Rozevitch, Shimon & Weiss, Avi, 1993. "Beneficiaries from Federal Transfers to Municipalities: The Case of Israel," Public Choice, Springer, vol. 76(4), pages 335-346, August.
    5. von Hagen, Jurgen & Eichengreen, Barry, 1996. "Federalism, Fiscal Restraints, and European Monetary Union," American Economic Review, American Economic Association, vol. 86(2), pages 134-138, May.
    6. Teresa Ter-Minassian, 1997. "Decentralization and Macroeconomic Management," IMF Working Papers 97/155, International Monetary Fund.
    7. Oates, Wallace E, 1969. "The Effects of Property Taxes and Local Public Spending on Property Values: An Empirical Study of Tax Capitalization and the Tiebout Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 77(6), pages 957-971, Nov./Dec..
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