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Elections and Governments` Behaviour - An Application to Portuguese Municipalities

Governments have an important role at defining the course of the economy. It is crucial, therefore, to understand their behaviour, their motivations and the factors underlying their policies, once the economy evolution can not be dissociated from the institutional and political background. This paper tests the relation between the economy and politics at the local administration level. Specifically, using a Portuguese municipalities`panel dataset, it tests opportunistics and partisan behaviour of local governments, either on instruments of local economic policy or on local economic outcomes. The main findings are: (i) local governments adopt an opportunistics behaviour, observed both on instruments and outcomes; and (ii) there is no evidence of partisan behaviour whatsoever. These results lead to important issues at light of the Stability and Growth Pact requirements.

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File URL: http://www3.eeg.uminho.pt/economia/nipe/docs/2004/NIPE_WP_8_2004.PDF
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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 8/2004.

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Date of creation: 2004
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Handle: RePEc:nip:nipewp:8/2004
Contact details of provider: Postal: Núcleo de Investigação em Políticas Económicas, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal
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  1. Torsten Persson & Guido Tabellini, . "Political Economics and Public Finance," Working Papers 149, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Nordhaus, William D, 1975. "The Political Business Cycle," Review of Economic Studies, Wiley Blackwell, vol. 42(2), pages 169-90, April.
  3. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
  4. Alberto Alesina & Alex Cukierman, 1987. "The Politics of Ambiguity," NBER Working Papers 2468, National Bureau of Economic Research, Inc.
  5. Kenneth Rogoff, 1987. "Equilibrium Political Budget Cycles," NBER Working Papers 2428, National Bureau of Economic Research, Inc.
  6. Frey, Bruno S & Schneider, Friedrich, 1978. "An Empirical Study of Politico-Economic Interaction in the United States," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 174-83, May.
  7. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
  8. Kenneth Rogoff & Anne Sibert, 1986. "Elections and Macroeconomic Policy Cycles," NBER Working Papers 1838, National Bureau of Economic Research, Inc.
  9. MacRae, C Duncan, 1977. "A Political Model of the Business Cycle," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 239-63, April.
  10. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 102(3), pages 651-78, August.
  11. Harrington, Joseph E, Jr, 1993. "Economic Policy, Economic Performance, and Elections," American Economic Review, American Economic Association, vol. 83(1), pages 27-42, March.
  12. Rosenberg, Jacob, 1992. " Rationality and the Political Business Cycle: The Case of Local Government," Public Choice, Springer, vol. 73(1), pages 71-81, January.
  13. Allers, Maarten & de Haan, Jakob & Sterks, Cees, 2001. " Partisan Influence on the Local Tax Burden in the Netherlands," Public Choice, Springer, vol. 106(3-4), pages 351-63, March.
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