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Beyond the socio‐economic use of fiscal transfers: The role of political factors in Greek intergovernmental grant allocations

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  • Yannis Psycharis
  • Stavroula Iliopoulou
  • Maria Zoi
  • Panagiotis Pantazis

Abstract

The aim of this paper is to explore the political factors lying behind the allocation of state grants to local government by providing empirical evidence from Greece. Results show that political considerations exert a statistically significant influence over the allocation of state grants to local government. Mayors politically aligned with the incumbent government receive higher shares of grants compared to the non‐aligned counterparts. Furthermore, political business cycle provides an important determinant in explaining the fluctuations in local government transfers. Grants to local government increase in the years before the national or local elections and wane over the following years. Our evidence also unveils the importance of re‐elected mayor's experience and networking in enticing fiscal allocations, thereby establishing consecutive mayoral wins as a key determinant of the municipality fiscal inducement. Collectively, contrary to the predictions of normative theory, our evidence demonstrates that political considerations rather than socioeconomic needs are able to explain the levels of grant allocations to Greek municipalities. El objetivo de este artículo es examinar los factores políticos subyacentes en la asignación de subvenciones estatales a los gobiernos locales, para lo cual se aportan pruebas empíricas de Grecia. Los resultados muestran que las consideraciones políticas ejercen una influencia estadísticamente significativa en la asignación de subvenciones estatales al gobierno local. Los alcaldes alineados políticamente con el gobierno en funciones reciben una mayor proporción de subvenciones en comparación con los no alineados. Además, el ciclo económico político es un factor determinante importante para explicar las fluctuaciones de las transferencias a los gobiernos locales. Las subvenciones a los gobiernos locales aumentan en los años previos a las elecciones nacionales o locales y disminuyen en los años posteriores. Las pruebas que se presentan también revelan la importancia de la experiencia del alcalde reelegido y el establecimiento de redes de contactos para atraer subvenciones fiscales, estableciendo de este modo victorias consecutivas en la alcaldía como un determinante clave del incentivo fiscal del municipio. En conjunto, contrariamente a las predicciones de la teoría normativa, las pruebas que se presentan demuestran que las consideraciones políticas, más que las necesidades socioeconómicas, son capaces de explicar los niveles de las asignaciones de subvenciones a los municipios griegos. 本稿は、ギリシャの事例から得られた実証的エビデンスを用いて、国家補助金の地方政府への配分の背後にある政治的要因を探索することを目的とする。結果から、政治的配慮が国家補助金の地方政府への配分に統計的に有意な影響を及ぼすことが示される。現政府と政治的に連携している首長は、連携していない首長より高い割合の助成金を受けている。さらに、地方財政移転の変動を説明する上で、政治的景気循環は重要な決定要因となる。地方政府への補助金は、国政選挙または地方選挙前の数年間は増加し、その後の数年間は減少している。また、我々が得たエビデンスから、市長の再選経験と財政配分の誘導をネットワークすることの重要性が明らかになり、すなわち、選挙での連続的な勝利が地方政府への財政誘導の重要な決定要因として確立される。まとめると、規範理論的な予想に反して、我々が得たエビデンスから、ギリシャの補助金の地方自治体への配分のレベルは、社会経済的ニーズよりも政治的な配慮によって説明できることが示される。

Suggested Citation

  • Yannis Psycharis & Stavroula Iliopoulou & Maria Zoi & Panagiotis Pantazis, 2021. "Beyond the socio‐economic use of fiscal transfers: The role of political factors in Greek intergovernmental grant allocations," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(3), pages 982-1008, June.
  • Handle: RePEc:bla:rgscpp:v:13:y:2021:i:3:p:982-1008
    DOI: 10.1111/rsp3.12319
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