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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/30440
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| Title: | | Do re-election probabilities influence public investment?  |
| Authors: | | Fiva, Jon H. Natvik, Gisle James |
| Issue Date: | | 2009 |
| Series/Report no.: | | CESifo working paper 2709 |
| Abstract: | | We identify exogenous variation in incumbent policymakers' re-election probabilities and explore empirically how this variation affects the incumbents' investment in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes preferred more strongly by the incumbents. This aligns with a theoretical framework where political parties disagree about which public goods to produce using labor and predetermined public capital. Key for the consistency between data and theory is to account for complementarity between physical capital and flow variables in government production. |
| Subjects: | | political economics strategic capital accumulation identifying popularity shocks |
| JEL: | | E62 H40 H72 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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