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By Fernando Ferreira and Joseph Gyourko

Abstract

Much recent research in political economy concludes that partisan political differences have important effects on policy outcomes at the state and federal levels of government. Such partisan effects are arguably due to the inability of political parties to credibly commit to centrist policies. These results are in stark contrast to Downs ’ (1957) prediction that the incentive to win elections would force politicians to adopt moderate policy positions appealing to the preferences of the median voter. We reexamine this issue at the local level of city government using a new panel data set of mayoral elections in the U. S. We first show that there are no partisan differences with respect to the composition of local expenditures, but there are differences in size of government across political parties, with city government being about 10 percent larger when the mayor is a Democrat. Those differences are reduced by more than one-half when applying a regression discontinuity design to deal with the endogeneity of the incumbent party, and in no case are they statistically significantly different from zero. Moreover, an empirical decomposition of the overall effect of party affiliation on policy outcomes finds a high degree of polic

Year: 2006
OAI identifier: oai:CiteSeerX.psu:10.1.1.417.1304
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