Opportunistic politicians and fiscal outcomes: the curious case of Vorarlberg

Köppl Turyna, Monika (2015): Opportunistic politicians and fiscal outcomes: the curious case of Vorarlberg.

Abstract

Using a unique set of electoral rules present in the Austrian state of Vorarlberg, we explore the question whether direct election of the mayor affects the size of local governments. Using difference-in-differences estimation and propensity score matching, we find evidence that direct elections of the mayor are associated with lower expenditure on public administration and public personnel, however compensated by higher expenditure in the visible categories of spending i.e. transportation, social protection and promotion of the economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: local expenditure, opportunistic politicians, electoral rules
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making; D - Microeconomics > D7 - Analysis of Collective Decision-Making > D72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H72 - State and Local Budget and Expenditures; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession

References

Ade, F., 2014. Do constitutions matter? Evidence from a natural experiment at the municipality level. Public Choice 160 (3-4), 367-389.

Akhmedov, A., Zhuravskaya, E., 2004. Opportunistic political cycles: test in a young democracy setting. The Quarterly Journal of Economics, 1301-1338.

Blume, L., Doering, T., Voigt, S., 2008. Fiskalische Effekte der Kommunalverfassungsreformen der 1990er Jahre in Deutschland/Reforming local constitutions in Germany during the 1990s and their fiscal effects. Jahrbuecher fur Nationaloekonomie und Statistik, 317-344.

Bracco, E., Porcelli, F., Redoano, M., 2013. Incumbent effects and partisan alignment in local elections: a regression discontinuity analysis using Italian data.

Brender, A., 2003. The effect of fiscal performance on local government election results in Israel: 1989{1998. Journal of Public Economics 87 (9), 2187-2205.

Castro, V., Martins, R., 2014. Political cycles and government expenditures: Evidence from Portugal. mimeo

Costa-Font, J., Moscone, F., 2009. The impact of decentralization and inter-territorial interactions on Spanish health expenditure. In: Spatial Econometrics. Springer, pp. 167-184.

Drazen, A., Eslava, M., 2010. Electoral manipulation via voter-friendly spending: Theory and evidence. Journal of Development Economics 92 (1), 39-52.

Egger, P., Koethenbuerger, M., Smart, M., 2007. Disproportionate influence? special interest politics under proportional and majoritarian electoral systems. Tech. rep., Working Paper, University of Munich.

Feld, L. P., Kirchgassner, G., 1999. Public debt and budgetary procedures: top down or bottom up? some evidence from swiss municipalities. In: Fiscal institutions and fiscal performance. University of Chicago Press, pp. 151-180.

Foucault, M., Madies, T., Paty, S., 2008. Public spending interactions and local politics. empirical evidence from French municipalities. Public Choice 137 (1-2), 57-80.

Furdas, M. D., Homolkova, K., Kis-Katos, K., 2015. Local political budget cycles in a federation: Evidence from west German cities. mimeo

Galli, E., Rossi, S. P., 2002. Political budget cycles: the case of the western german Laender. Public Choice 110 (3-4), 283-303.

Hayo, B., Neumeier, F., 2012. Leaders' impact on public spending priorities: The case of the german Laender. Kyklos 65 (4), 480-511.

Hessami, Z., 2014. Electoral rules for mayors and incentives to pork-barrel: Quasi experimental evidence from german municipalities. mimeo

Houlberg, K., Pedersen, L. H., 2015. Political consensus and fiscal outcomes. Local Government Studies 41 (1), 78-99.

Kneebone, R. D., McKenzie, K. J., 2001. Electoral and partisan cycles in fiscal policy: An examination of Canadian provinces. International Tax and Public Finance 8 (5-6), 753-774.

Kothenbuerger, M., Egger, P., Smart, M., 2013. Do electoral rules make legislators differently responsive to fiscal transfers? Evidence from German municipalities.

Lechner, M., 2002. Some practical issues in the evaluation of heterogeneous labour market programmes by matching methods. Journal of the Royal Statistical Society: Series A (Statistics in Society) 165 (1), 59-82.

Nordhaus, W. D., 1975. The political business cycle. The Review of Economic Studies, 169-190.

Pommerehne, W. W., 1978. Institutional approaches to public expenditure: Empirical evidence from swiss municipalities. Journal of Public Economics 9 (2), 255-280.

Rogoff, K., et al., 1990. Equilibrium political budget cycles. American Economic Review 80 (1), 21-36.

Sanz, I., Velazquez, F. J., 2002. Determinants of the composition of government expenditure by functions. Universidad Complutense de Madrid. Grupo de Economia Europea.

Veiga, L. G., Veiga, F. J., 2007. Political business cycles at the municipal level. Public Choice 131 (1-2), 45-64.

Villa, J. M., 2014. Diff: Stata module to perform differences in differences estimation. Statistical Software Components.

Werck, K., Heyndels, B., Geys, B., 2008. The impact of central places on spatial spending patterns: evidence from Flemish local government cultural expenditures. Journal of Cultural Economics 32 (1), 35-58.