Tax degression and the political budget cycle in French municipalities

Abstract

This paper explores local incumbent behaviour during office. First, empirical evidence is given about the fiscal policy instruments by which French municipalities try to influence election outcome. Special care is taken about the econometric issues raised by the dynamic panel data setting. Secondly, a theoretical framework is built to investigate the political budget cycle when local taxation is degressive as in France. Its main results help understanding of the empirical findings.

Public spending interactions and local politics. Empirical evidence from French municipalities

“…We have thus set up dummy variables for the election year, the year before the election, and the year after the election. In a previous empirical work, Binet and Pentecote (2004) also found an opportunistic use of local public spending in France for 883 municipalities.…”

Analyse écologique des déterminants de la participation électorale municipale au Québec

“…Dans le contexte municipal, la principale assiette fiscale est constituée de la taxe foncière qui est un système de taxation dégressif. Binet et Pentecôte (2004) ont montré dans le contexte français que ce mode de taxation a un effet sur le comportement de l'électeur. Il est donc cohérent que l'on retrouve davantage de participation dans les municipalités où l'électeur médian est moins fortuné.…”

Self‐Preserving Leviathans Evidence from Local‐Level Data

“…Cioffi et al () present evidence for local political budget cycles in Italian municipalities. More supporting evidence is provided by Strate et al () and Bhattacharyya and Wassmer () for American towns, by Binet and Pentecôte () and Foucault et al () for French municipalities and by Baleiras and da Silva Costa () and Veiga and Veiga () for municipalities in Portugal. Akhmedov and Zhuravskaya () examine data on Russian regional government expenditures and observe a strong increase in total public spending and deficit close to the election day.…”