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Title:Electoral rules, political competition and fiscal expenditures: regression discontinuity evidence from Brazilian municipalities PDF Logo
Authors:Chamon, Marcos
de Mello, João M. P.
Firpo, Sergio
Issue Date:2009
Series/Report no.:IZA Discussion Papers 4658
Abstract:We exploit a discontinuity in Brazilian municipal election rules to investigate whether political competition has a causal impact on policy choices. In municipalities with less than 200,000 voters mayors are elected with a plurality of the vote. In municipalities with more than 200,000 voters a runoff election takes place among the top two candidates if neither achieves a majority of the votes. We show that the possibility of runoff increases political competition. We use the discontinuity as a source of exogenous variation to infer causality from political competition to fiscal policy. Our results suggest that political competition induces more investment and less current expenditures, particularly personnel expenditures. The impact of political competition is larger when incumbents can run for reelection, suggesting incentives matter insofar as incumbents can themselves remain in office.
Subjects:Electoral systems
political competition
regression discontinuity
fiscal expenditures
JEL:H72
D72
C14
P1
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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