Do Re-election Probabilities Influence Public Investment?

Jon Fiva and Gisle Natvik

No 16/2009, Memorandum from Oslo University, Department of Economics

Abstract: We identify exogenous variation in incumbent policymakers’ re-election probabilities and explore empirically how this variation affects the incumbents’ investment in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes preferred more strongly by the incumbents. This aligns with a theoretical framework where political parties disagree about which public goods to produce using labor and predetermined public capital. Key for the consistency between data and theory is to account for complementarity between physical capital and flow variables in government production.

Keywords: Political Economics; Strategic Capital Accumulation; Identifying Popularity Shocks (search for similar items in EconPapers)
JEL-codes: E62 H40 H72 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2009-08-15
New Economics Papers: this item is included in nep-cdm, nep-mac, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Forthcoming as Fiva, Jon H. and Gisle James Natvik, 'Do Re-election Probabilities Influence Public Investment?' in Public Choice, 2013.

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Related works:
Journal Article: Do re-election probabilities influence public investment? (2013)
Working Paper: Do re-election probabilities influence public investment? (2010)
Working Paper: Do re-election probabilities influence public investment? (2009)
Working Paper: Do Re-election Probabilities Influence Public Investment? (2009)
Working Paper: Do re-election probabilities influence public investment? (2009)
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