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Ideology and fiscal policy: quasi-experimental evidence from the German States

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  • Baskaran, Thushyanthan

Abstract

Is government ideology important for fiscal policy? I study this question with data from all German States over the period 1975-2005. To identify the effect of ideology, I rely on a fuzzy regression discontinuity design. I find that left-wing state governments spend more than state governments with right-wing and mixed ideology. Deficits of left-wing governments are larger than those of right-wing governments but smaller than those of governments with mixed ideology. These results are robust to sensitivity tests.

Suggested Citation

  • Baskaran, Thushyanthan, 2012. "Ideology and fiscal policy: quasi-experimental evidence from the German States," Center for European, Governance and Economic Development Research Discussion Papers 144, University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:144
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    References listed on IDEAS

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    Cited by:

    1. António Afonso & Maria João Guedes, 2014. "EU Finance Ministers, Capital Markets and Fiscal Outcomes," Working Papers Department of Economics 2014/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.

    More about this item

    Keywords

    government ideology; fiscal policy; fiscal federalism;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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