This paper provides a simple model to explain effect of political alignment between
different tiers of government on policy choices and election outcomes. We
derive precise predictions that, as long as voters attribute most of the credit for
providing public goods to the local government: (i) aligned municipalities receive
more grants, set lower taxes and provide more public goods, (ii) that the probability
that the local incumbent is re-elected is higher in aligned municipalities compared to
not aligned ones. Our empirical strategy to identify the alignment effects is built
upon the fact that being or not aligned changes discontinuously at 50% of the vote
share of local parties. This allows us to use sharp regression discontinuity design.
Our theoretical predictions are largely confirmed using a new dataset on Italian
public finance and electoral data at the central and local level