Do Parties Matter for Fiscal Policy Choices? A Regression-Discontinuity Approach

Per Pettersson-Lidbom ()

No 2003:15, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: This paper presents a method for measuring the causal effect of party control on fiscal policy outcomes. The source of identifying information comes from an institutional feature of the election system, namely that party control changes discontinuously at 50 percent of the vote share, i.e., a party that receives more than 50 percent of the votes will be in office. The approach is applied to a very large panel data set from Swedish local governments, which offers a number of attractive features. The results show that there is large and significant party effect: on average, left-wing parties spend and tax 2.5 percent more than right-wing governments. The party effect constitutes 1 percent of average

municipality income, clearly a sizeable effect.

Keywords: political parties; party control; regression-discontinuity design (search for similar items in EconPapers)
JEL-codes: P16 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2003-12-17
New Economics Papers: this item is included in nep-pol
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:sunrpe:2003_0015

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