IDEAS home Printed from https://ideas.repec.org/p/rio/texdis/559.html
   My bibliography  Save this paper

Electoral rules, political competition and fiscal spending : regression discontinuity evidence from Brazilian municipalities

Author

Listed:
  • Marcos Chamon

    () (International Monetary Fund)

  • João Manoel Pinho de Mello

    () (Department of Economics PUC-Rio)

  • Sergio Firpo

    () (Escola de Economia de São Paulo, FGV)

Abstract

We exploit a discontinuity in Brazilian municipal election rules to investigate whether political competition has a causal impact on policy choices. In municipalities with less than 200,000 voters mayors are elected with a plurality of the vote. In municipalities with more than 200,000 voters a run-off election takes place among the top two candidates if neither achieves a majority of the votes. At a first stage, we show that the possibility of runoff increases political competition. At a second stage, we use the discontinuity as a source of exogenous variation to infer causality from political competition to fiscal policy. Our second stage results suggest that political competition induces more investment and less current spending, particularly personnel expenses. Furthermore, the impact of political competition is larger when incumbents can run for reelection, suggesting incentives matter insofar as incumbents can themselves remain in office.

Suggested Citation

  • Marcos Chamon & João Manoel Pinho de Mello & Sergio Firpo, 2008. "Electoral rules, political competition and fiscal spending : regression discontinuity evidence from Brazilian municipalities," Textos para discussão 559, Department of Economics PUC-Rio (Brazil).
  • Handle: RePEc:rio:texdis:559
    as

    Download full text from publisher

    File URL: http://www.econ.puc-rio.br/pdf/td559.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary Education," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 577-599.
    2. Besley, Timothy J. & Persson, Torsten & Sturm, Daniel M, 2005. "Political Competition and Economic Performance: Theory and Evidence from the United States," CEPR Discussion Papers 5138, C.E.P.R. Discussion Papers.
    3. Filipe R. Campante & Davin Chor & Quoc-Anh Do, 2009. "Instability And The Incentives For Corruption," Economics and Politics, Wiley Blackwell, vol. 21(1), pages 42-92, March.
    4. Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November.
    5. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    6. Imbens, Guido W. & Lemieux, Thomas, 2008. "Regression discontinuity designs: A guide to practice," Journal of Econometrics, Elsevier, vol. 142(2), pages 615-635, February.
    7. Davin Chor & Do Quoc-Anh & Filipe R Campante, 2008. "Instability and Incentives for Corruption," Macroeconomics Working Papers 22070, East Asian Bureau of Economic Research.
    8. Lemieux, Thomas & Milligan, Kevin, 2008. "Incentive effects of social assistance: A regression discontinuity approach," Journal of Econometrics, Elsevier, vol. 142(2), pages 807-828, February.
    9. Claudio Ferraz & Frederico Finan, 2008. "Exposing Corrupt Politicians: The Effects of Brazil's Publicly Released Audits on Electoral Outcomes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 703-745.
    10. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems and Public Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 609-657.
    11. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    12. Arianna Degan & Antonio Merlo, 2011. "A Structural Model Of Turnout And Voting In Multiple Elections," Journal of the European Economic Association, European Economic Association, vol. 9(2), pages 209-245, April.
    13. Fernando Ferreira & Joseph Gyourko, 2009. "Do Political Parties Matter? Evidence from U.S. Cities," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 399-422.
    14. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 533-575.
    15. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
    16. Timothy Besley & Anne Case, 1995. "Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 769-798.
    17. David S. Lee & Enrico Moretti & Matthew J. Butler, 2004. "Do Voters Affect or Elect Policies? Evidence from the U. S. House," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 807-859.
    18. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
    19. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
    20. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems and Public Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 609-657.
    21. Antonio Merlo, 2005. "Whither Political Economy? Theories, Facts and Issues," PIER Working Paper Archive 05-033, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2005.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Barone, Guglielmo & de Blasio, Guido, 2013. "Electoral rules and voter turnout," International Review of Law and Economics, Elsevier, vol. 36(C), pages 25-35.
    2. Sergio Firpo & Renan Pieri & André Portela Souza, 2017. "Electoral impacts of uncovering public school quality: Evidence from Brazilian municipalities," Economia, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 17(1), pages 1-17.
    3. Stefano Gagliarducci & Tommaso Nannicini, 2013. "Do Better Paid Politicians Perform Better? Disentangling Incentives From Selection," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 369-398, April.
    4. Menezes, Aline, 2017. "Do some electoral systems select better politicians than others? Single- vs dual-ballot elections," MPRA Paper 79370, University Library of Munich, Germany.
    5. Emanuele Bracco & Alberto Brugnoli, 2012. "Runoff vs. plurality," Working Papers 23767067, Lancaster University Management School, Economics Department.
    6. Ade, Florian & Freier, Ronny, 2013. "Divided government versus incumbency externality effect—Quasi-experimental evidence on multiple voting decisions," European Economic Review, Elsevier, vol. 64(C), pages 1-20.
    7. Guido De Blasio & Guglielmo Barone, 2011. "Local electoral rules and political participation," ERSA conference papers ersa11p418, European Regional Science Association.
    8. Francisco Antonio Sousa De Araujo & Paulo De Melo Jorge Neto, 2016. "Competição Política, Grupos De Interesse E A Oferta De Serviços Públicos: Uma Análise Para Os Municípios Cearenses Nos Anos De 2005 E 2009," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42ndd Brazilian Economics Meeting] 064, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    9. Bracco, Emanuele & Redoano, Michela & Porcelli, Francesco, 2012. "Incumbent Effects and Partisan Alignment in Local Elections: a Regression Discontinuity Analysis Using Italian Data," CAGE Online Working Paper Series 87, Competitive Advantage in the Global Economy (CAGE).
    10. Florian Ade & Ronny Freier, 2011. "Divided Government versus Incumbency Externality Effect - Quasi-experimental Evidence on Multiple Voting Decisions," CESifo Working Paper Series 3683, CESifo Group Munich.

    More about this item

    Keywords

    Electoral Systems; Strategic Voting; Political Competition; Regression Discontinuity; Fiscal Spending. JEL Codes: H72; D72; C14; P1;

    JEL classification:

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rio:texdis:559. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/dpucrbr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.