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Partisanship and local fiscal policy: Evidence from Brazilian cities

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  • Gouvêa, Raphael
  • Girardi, Daniele

Abstract

We study the role of partisanship in shaping local fiscal policy in Brazilian cities in the 2004–2016 period. Using a regression-discontinuity design, we find no effect of left-wing mayors on the size of the city government. We find a modest but robust positive effect of approximately 0.6 percentage points on the social expenditures share, which translates in a small (approximately 1 percent) increase in social expenditure per capita. The impact of left-wing mayors on social spending is stronger in the 2004–2008 ‘boom years’, for lame-duck mayors and in cities receiving oil windfalls. These results suggest that Brazilian parties attempt to shape the allocation of municipal resources to favor their respective electoral bases but their ability to do so is severely limited by factors such as institutional constraints and re-election concerns.

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  • Gouvêa, Raphael & Girardi, Daniele, 2021. "Partisanship and local fiscal policy: Evidence from Brazilian cities," Journal of Development Economics, Elsevier, vol. 150(C).
    • Handle: RePEc:eee:deveco:v:150:y:2021:i:c:s030438782100016x
    DOI: 10.1016/j.jdeveco.2021.102637
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    More about this item

    Keywords

    Local fiscal policy; Political economy; Partisanship; Brazilian cities; Regression-discontinuity design;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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