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Government spending and re-election: Quasi-experimental evidence from Brazilian municipalities

  • Stephan Litschig
  • Kevin Morrison

Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population cutoffs over the period 1982-1985. We show that extra fiscal transfers resulted in a 20% increase in local government spending per capita, and an increase of about 10 percentage points in the re-election probability of local incumbent parties. In the context of an agency model of electoral accountability, as well as existing results indicating that the revenue jumps studied here had positive impacts on education outcomes and earnings, these results suggest that expected electoral rewards encouraged incumbents to spend additional funds in ways that were valued by voters.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/1233.pdf
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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 1233.

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Date of creation: Jun 2010
Date of revision: Jun 2012
Handle: RePEc:upf:upfgen:1233
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. Albert Solé-Ollé & Pilar Sorribas-Navarro, 2008. "Does Partisan Alignment Affect the Electoral Reward of Intergovernmental Transfers?," CESifo Working Paper Series 2335, CESifo Group Munich.
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