Electoral rules, political competition and fiscal spending: regression discontinuity evidence from Brazilian municipalities

Marcos Chamon (), Joao De Mello and Sergio Firpo
Authors registered in the RePEc Author Service: Renan Gomes De Pieri

No 559, Textos para discussão from Department of Economics PUC-Rio (Brazil)

Abstract: We exploit a discontinuity in Brazilian municipal election rules to investigate whether political competition has a causal impact on policy choices. In municipalities with less than 200,000 voters mayors are elected with a plurality of the vote. In municipalities with more than 200,000 voters a run-off election takes place among the top two candidates if neither achieves a majority of the votes. At a first stage, we show that the possibility of runoff increases political competition. At a second stage, we use the discontinuity as a source of exogenous variation to infer causality from political competition to fiscal policy. Our second stage results suggest that political competition induces more investment and less current spending, particularly personnel expenses. Furthermore, the impact of political competition is larger when incumbents can run for reelection, suggesting incentives matter insofar as incumbents can themselves remain in office.

Keywords: Electoral Systems; Strategic Voting; Political Competition; Regression Discontinuity; Fiscal Spending. JEL Codes: H72; D72; C14; P1 (search for similar items in EconPapers)
Pages: 47p
Date: 2008-10
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Working Paper: Electoral rules, political competition and fiscal spending: regression discontinuity evidence from brazilian municipalities (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:rio:texdis:559

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