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Title:Do re-election probabilities influence public investment? PDF Logo
Authors:Fiva, Jon H.
Natvik, Gisle James
Issue Date:2009
Series/Report no.:Memorandum // Department of Economics, University of Oslo 2009,16
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:Memorandum, Department of Economics, University of Oslo

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