Political alignment and intergovernmental transfers in parliamentary systems: Evidence from Germany

Thushyanthan Baskaran and Zohal Hessami

No 2014-17, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: We study partisan favoritism in the allocation of intergovernmental transfers. Our dataset combines local council election data with fiscal data on grant allocations in the German state of Hesse. Our identification strategy is a regression discontinuity design that relies on a perturbation procedure to classify close elections. We find that left-wing state governments favored aligned municipalities while right-wing state governments favored unaligned ones. One plausible explanation for this difference in the behavior of left- and right-wing governments is that only few local councils had absolute right-wing majorities during the tenure of the right-wing state governments. Therefore, right-wing state governments had to use transfers to “buy off” unaligned municipalities, while left-wing state governments could use transfers to enhance their electoral prospects.

Keywords: Intergovernmental transfers; political alignment; partisan behavior; state and local governments (search for similar items in EconPapers)
JEL-codes: D72 H72 H77 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2014-09-02
New Economics Papers: this item is included in nep-cdm, nep-pbe, nep-pol and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Political alignment and intergovernmental transfers in parliamentary systems: evidence from Germany (2017)
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