Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/130400 
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper No. 5773
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This study relies on a recent reform introducing gubernatorial term limits at the Portuguese local level to explore how an exogenous variation in eligibility for re-election affects local fiscal policy choices. Relying on electoral and fiscal outcomes for the past three complete electoral terms and a quasi-experimental diff-in-diff approach, the empirical analysis estimates how fiscal policy differs on average between re-eligible and term-limited incumbents. Results indicate that rather than engaging in opportunistic behavior, lame ducks pursue more conservative fiscal policies. Term limited officeholders choose lower property tax rates and reduced levels of current expenditure relative to re-eligible incumbents. Heterogeneous effects further suggest that ineligible mayors behave more truthfully and do not engage in political business cycles, challenging previous results in the literature.
Subjects: 
institutional reform
term limits
fiscal policy
municipal accounts
JEL: 
D72
H11
Document Type: 
Working Paper
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