Abstract
In this research letter, we examine the impact of municipal budget policy on the percentage of votes for the incumbent majority parties in subsequent elections. We contribute to the academic literature by examining the combined influence of taxes, expenditures and debt. Based on data for Flanders (Belgium) between 1994 and 2012, we find no significant association between these budget variables and the actual election results.
Highlights
In recent decades, various contributions to the field of political economics have focused on the association between budgetary policies and election results at the municipal level
When controlling for municipality fixed effects or when the exogenous variation in the aforementioned instruments is exploited, there are no significant associations between the aforementioned budget variables and the percentage of votes for the parties of the incumbent majority
As indicated in Column (1) of Table 3, an increase of 1 unit in the local property tax (LPT) in the neighbouring municipalities improves the percentage of votes for the incumbent majority in the municipality in question by 0.007 percentage points (p = 0.009)
Summary
Various contributions to the field of political economics have focused on the association between budgetary policies and election results at the municipal level. The a priori expectation of this type of research is that voters will punish their own municipal governments if the policies in the neighbouring municipalities are more favourable by comparison This expectation is confirmed for Spain and France in studies by Bosch and Solle-Ole [1] and by Dubois and Paty [4]. These authors report evidence that higher taxes within a voter’s own municipality have a negative impact on the election results of the incumbent majority, as well as evidence that higher taxes in the neighbouring municipalities have a positive impact
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