Allocating the U.S. Federal Budget to the States: The Impact of the President

Larcinese, Valentino; Rizzo, Leonzio; Testa, Cecilia

doi:10.1111/j.1468-2508.2006.00419.x

“…In India, Arulampalam et al (2009) find that aligned states receive larger grants, especially if they are swing states. Larcinese, Rizzo, and Testa (2006) study the allocation of the U.S. federal budget and show that states whose governors belong to the same party of the President receive more funds. Also for the U.S., Berry, Burden, and Howell (2010) use a large panel data set of federal outlays and show that districts and counties receive more money when their legislators are aligned with the federal President.…”

Section: Introductionmentioning

confidence: 99%

Tying Your Enemy's Hands in Close Races: The Politics of Federal Transfers in Brazil

Brollo

¹

,

Nannicini

²

2012

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper uses a quasi-experimental strategy to disclose utterly political reasons behind the allocation of intergovernmental transfers in a federal state. We apply a regression discontinuity design in close elections to identify the effect of political alignment on federal transfers to municipal governments in Brazil. We find that municipalities where the mayor is affiliated with the coalition of the Brazilian President receive larger (discretionary) infrastructure transfers by about 40% in pre-election years. This effect is mainly driven by the fact that the federal government penalizes municipalities run by mayors from the opposition coalition who won by a narrow margin, thereby tying their hands for the next election.JEL Classification: C21, D72, H77

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“…ical alignment with the center generates higher levels of discretionary grant to the local government, for example, Levitt and Snyder (1995) and Larcinese et al (2006), for the US, Solé-Ollé and Sorribas-Navarro (2008) for Spain, Arulampalam et al (2009) for India, Case (2001) for Albania, Rodden and Wilkinson (2004) for India, Brollo and Nannicini (2012) for Brazil, and Migueis (2013) for Portugal. In particular, our theoretical finding that alignment effects are stronger in election years is consistent with Brollo and Nannicini (2012).…”

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confidence: 99%

Intergovernmental grants as signals and the alignment effect: Theory and evidence

Bracco

¹

,

Lockwood

²

,

Porcelli

³

et al. 2015

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper provides a simple political agency model to explain the effect of political alignment between different tiers of government on intergovernmental grants and election outcomes. Key features of the model are: (i) rational voters interpret public good provision as a signal of incumbent competence, and (ii) realistically, grants are unobservable to voters. In this setting, the national government will use the grant as an instrument to manipulate the public good signal for the benefit of aligned local incumbents and challengers. Then, aligned municipalities receive more grants, with this effect being stronger before elections, and the probability that the aligned local incumbent is re-elected is higher. These predictions are tested using a regression discontinuity design on a new data-set on Italian municipalities. At a second empirical stage, the national grant to municipalities is instrumented with an alignment indicator, allowing estimation of a flypaper effect for Italian municipalities. Terms of use: Documents inJEL-Code: H200, H770, H87, D700.

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“…The empirical literature on tactical allocation has mixed findings. For example, Valentino Larcinese, Leonzio Rizzo, and Cecilia Testa (2006), in their study of federal outlays for the forty-eight U.S. continental states from 1982 to 2000, find that states whose governor, or whose majority delegation in the House, belong to the same party of the president are rewarded with more federal budget allocations. However, they do not control for the interaction of alignment and swing states.…”

mentioning

confidence: 99%

Party Alignment and Political Budget Cycles: The Argentine Provinces

Lema

¹

,

Streb

²

2013

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The links between subnational political budget cycles (PBCs) and the national government in federal countries have seldom been studied. We study the behavior of the budget balance, public expenditures, and revenues in Argentine provinces during the 1985-2001 period. We find that in election years public expenditures increase, but revenues also do -a result exactly contrary to the predictions of rational opportunistic models of aggregate PBCs -and the budget deficit does not increase significantly. Since the increase in provincial revenues is due to larger federal transfers, we incorporate the influence of party alignment between governors and president. Public expenditures in election years increase in aligned provinces because of larger federal transfers, without affecting the budget deficit; in contrast, the budget deficit tends to increase in unaligned provinces. The federal government thus plays a key role in subnational PBCs, with an electoral cycle in the allocation of federal transfers. JEL classification codes: D72, E62

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Allocating the U.S. Federal Budget to the States: The Impact of the President

Cited by 219 publications

References 46 publications

Tying Your Enemy's Hands in Close Races: The Politics of Federal Transfers in Brazil

Tying Your Enemy's Hands in Close Races: The Politics of Federal Transfers in Brazil

Intergovernmental grants as signals and the alignment effect: Theory and evidence

Party Alignment and Political Budget Cycles: The Argentine Provinces

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