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Do bailouts buy votes? Evidence from a panel of Hessian municipalities

  • Baskaran, Thushyanthan

I study whether bailouts of local governments carry electoral benefits for state governments with a dataset covering 421 municipalities in the German state of Hesse over the period 1999-2011. I find that past bailouts have no economically significant effect on the municipality-level vote share of the parties that formed the state government in subsequent state elections. On the other hand, bailouts lead to vote increases for the ruling parties in subsequent local elections. On balance, these results suggest that electoral concerns are not the reason why central governments find it difficult to commit to a no-bailout policy.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 48228.

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Date of creation: 2013
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Handle: RePEc:pra:mprapa:48228
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  10. Albert Sole-Olle & Pilar Sorribas-Navarro, 2008. "Does partisan alignment affect the electoral reward of intergovernmental transfers?," Working Papers in Economics 206, Universitat de Barcelona. Espai de Recerca en Economia.
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  16. Thushyanthan Baskaran & Zohal Hessami, 2013. "Monetary Integration, Soft Budget Constraints, and the EMU Sovereign Debt Crises," Working Paper Series of the Department of Economics, University of Konstanz 2013-03, Department of Economics, University of Konstanz.
  17. Robert Inman, 2001. "Transfers and Bailouts: Institutions for Enforcing Local Fiscal Discipline," Constitutional Political Economy, Springer, vol. 12(2), pages 141-160, June.
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