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Elections and Government Efficiency

Florian Dorn ()

No 363, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: Politicians are expected to influence policy outcomes in a way to gain electoral advantage. There is, however, a pending question whether efficiency in the provision of public goods and services is affected by strategic behavior. I examine how electoral cycles influence local government efficiency by using OLS fixed effects, event study, and instrumental variable estimations in a large balanced panel of around 2,000 municipalities in the German state of Bavaria. Cost efficiency is estimated by employing a fixed effects semi-parametric stochastic frontier analysis. The results show that electoral cycles increase government efficiency in election and pre-election years by around 0.75– 0.85 %. The effect is larger when executive and council electoral cycles coincide, and when incumbent mayors run for office again. My findings suggest an efficiencyenhancing effect of elections at given institutional conditions.

Keywords: Electoral cycle; efficiency; local government; panel data; event study; stochastic frontier analysis (sfa); instrumental variables (search for similar items in EconPapers)
JEL-codes: C14 C23 C26 D72 D73 H41 H70 H72 R15 R50 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cdm, nep-eff, nep-eur and nep-pol
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