Rewarding Allegiance: Political Alignment and Fiscal Outcomes in Local Government

Christa Brunnschweiler and Samuel Kwabena Obeng
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Samuel Kwabena Obeng: University of East Anglia

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We examine how local governments' political alignment with central government affects subnational fiscal outcomes. In theory, alignment could be rewarded with more intergovernmental transfers, or swing voters in unaligned constituencies could be targeted instead. We analyze data from Ghana, which has a complex decentralized system: District Chief Executives (DCEs) are centrally-appointed local administrators loyal to the ruling party, while district MPs may belong to another party. A formula for transfer distribution aims to limit the ifluence of party politics. Using a new dataset for 1994-2014 and a regression discontinuity design, we find that despite this system, districts with aligned MP and DCE receive more transfers, have higher district expenditure, and more internally generated funds. Results are strongest for a subsample of constant districts over the period, suggesting that municipal fragmentation has weakened political alignment effects. We also show strong electoral cycle effects, and find a crowd-in effect for Ghanaian districts. JEL codes: H7 ; D72 ; H87 ; O55

Keywords: fiscal federalism; political alignment; ypaper effect; Ghana; regression discontinuity (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-cdm, nep-pol and nep-ure
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https://warwick.ac.uk/fac/soc/economics/research/w ... erp_1316_-_obeng.pdf

Related works:
Working Paper: Rewarding allegiance: Political alignment and fiscal outcomes in local government (2023)
Working Paper: Rewarding Allegiance: Political Alignment and Fiscal Outcomes in Local Government (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1316

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