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Tax limits and local democracy

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  • Federico Revelli

    (University of Torino)

Abstract

Based on a theoretical model where state limits on local government policy elicit a move from private value (position issue) to common value (valence issue) voting, I exploit exogenous variation in tax limitation rules in over 7,000 Italian municipalities during the 2000s to show that fiscal restraints provoke a fall in voter turnout and number of mayor candidates, and a rise in elected mayors’ valence proxy and win margins. The evidence is compatible with the hypothesis of hierarchical tax limitations fading the ideological stakes of local elections and favoring valence-based party line crossing, thus questioning the influential accountability postulate of the fiscal decentralization lore.

Suggested Citation

  • Federico Revelli, 2013. "Tax limits and local democracy," Working Papers 2013/29, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2013-29
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    Cited by:

    1. Lo Prete, Anna & Revelli, Federico, 2014. "Voter Turnout and City Performance," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201435, University of Turin.
    2. David Flacher & Hugo Harari-Kermadec & Léonard Moulin, 2013. "Financing Higher Education: a contributory education scheme," CEPN Working Papers hal-00870921, HAL.
    3. Federico Revelli, 2016. "Tax limits and local elections," Public Choice, Springer, vol. 166(1), pages 53-68, January.

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    More about this item

    Keywords

    Local elections; voter turnout; tax and expenditure limitations; fiscal decentralization;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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