Do re-election probabilities influence public investment?

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2709

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policy ; Publicly Provided Goods: General ; State and Local Budget and Expenditures
• Subject: political economics ; strategic capital accumulation ; identifying popularity shocks ; Infrastrukturinvestition ; Öffentliche Investition ; Wiederwahl ; Public Choice ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fiva, Jon H. ; Natvik, Gisle James
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/30440
• Last update: 10.03.2025, 11:46 AM CET