Government Spending and Re-election: Quasi-Experimental Evidence from Brazilian Municipalities

Stephan Litschig

No 515, Working Papers from Barcelona School of Economics

Abstract: Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population cutoffs over the period 1982-1985. We show that extra fiscal transfers resulted in a 20% increase in local government spending per capita, and an increase of about 10 percentage points in the re-election probability of local incumbent parties. In the context of an agency model of electoral accountability, as well as existing results indicating that the revenue jumps studied here had positive impacts on education outcomes and earnings, these results suggest that expected electoral rewards encouraged incumbents to spend additional funds in ways that were valued by voters.

Keywords: voting; government spending; regression discontinuity (search for similar items in EconPapers)
JEL-codes: D72 H40 H72 (search for similar items in EconPapers)
Date: 2015-09
New Economics Papers: this item is included in nep-cdm, nep-geo, nep-pbe, nep-pol and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Government spending and re-election: Quasi-experimental evidence from Brazilian municipalities (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:515

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