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Do political parties matter? Endogenous fragmentation, partisanship, and local public expenditures in Finland

Author

Listed:
  • Benoît LE MAUX

    (University of Rennes 1, CREM-CNRS, Condorcet Center for Political Economy, France)

  • Kristýna DOSTÁLOVÁ

    (University of Rennes 1, CREM-CNRS, France)

  • Antti MOISIO

    (Finnish Council of Regulatory Impact Analysis)

Abstract

Both the Weak Government Hypothesis and the Partisan Theory state that institutional settings are sufficiently permissive to allow elected politicians to maximize their own utility at the expense of citizens’ preferences. We test this statement using data on Finnish local public expenditures. One important point is that the composition of the government can be explained by the hetero-geneity of voters’ preferences, hence the need for appropriate techniques to control for a potential selection bias. Using propensity score matching (PSM) methods, we demonstrate that neither the Weak Government Hypothesis nor the Partisan Theory provide an explanation of public spending differences. What appears to be the influence of government composition is in fact shown to be a demand driven process.

Suggested Citation

  • Benoît LE MAUX & Kristýna DOSTÁLOVÁ & Antti MOISIO, 2017. "Do political parties matter? Endogenous fragmentation, partisanship, and local public expenditures in Finland," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2017-02-ccr, Condorcet Center for political Economy.
  • Handle: RePEc:tut:cccrwp:2017-02-ccr
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Political fragmentation; Partisan effects; Local expenditures; Propensity score matching;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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