Abstract
Partisan cable news broadcasts have a causal effect on the size and composition of budgets in U.S. localities. Utilizing channel positioning as an instrument for viewership, we show that exposure to the conservative Fox News Channel shrinks local government budgets, while liberal MSNBC enlarges them. Revenue changes are driven by shifts in property taxes, a key tool for local redistributive policy. Expenditure changes are driven by public hospital expenditures, an important discretionary public good provided by local governments. We also find evidence that Fox News exposure increased privatization (while MSNBC decreased it). An analysis of mechanisms suggests that the results are driven by changes in voter preferences, but not by changes in partisan control of city governments.
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