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Do re-election probabilities influence public investment?

  • Jon H. Fiva

    ()

    (University of Oslo)

  • Gisle James Natvik

    ()

    (Norges Bank)

We identify exogenous variation in incumbent policymakers’ re-election probabilities and explore empirically how this variation affects their investments in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes preferred more strongly by the incumbents. This aligns with a theoretical framework where political parties disagree about which public goods to produce using labor and predetermined public capital.

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File URL: http://ieb.ub.edu/aplicacio/fitxers/2009/12/Doc2009-36.pdf
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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2009/36.

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Length: 54 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:ieb:wpaper:2009/12/doc2009-36
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