Political Budget Cycles: Evidence from Italian Cities / Alberto Alesina, Matteo Paradisi.

Format:

Book

Author/Creator:

Alesina, Alberto.

Contributor:

National Bureau of Economic Research.

Paradisi, Matteo.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20570.

NBER working paper series no. w20570

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Political Budget Cycles

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

The introduction of a new real estate taxes in Italy in 2011 generated a natural experiment, which is useful to test political budget cycles, i.e. the strategic choice of fiscal variables in relation to elections. We do find substantial evidence of political budget cycles, with municipalities choosing lower tax rates when close to elections. We observe this budget cycle only for smaller municipalities where the tax was more likely to be the single most important issue for the local government. Cities close to elections with large deficits did not set lower rates before elections, probably because they felt the binding constraints of budget rules.

Notes:

Print version record

October 2014.