Abstract
A long-standing issue in political economics is to what extent party control makes a difference in determining fiscal and economics policies. This question is very difficult to answer empirically because parties are not randomly selected to govern political entities. This article uses a regression-discontinuity design, namely, party control changes discontinuously at 50% of the vote share, which can produce “near” experimental causal estimates of the effect of party control on economic outcomes. The method is applied to a large panel data set from Swedish local governments with a number of attractive features. The results show that there is an economically significant party effect: Left-wing governments spend and tax 2–3% more than right-wing governments. Left-wing governments also have 7%lower unemployment rates, which is partly due to that left-wing governments employ 4% more workers than right-wing governments. (JEL: C21, D72, D78, H71, H72)
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
