Public Choice

, Volume 171, Issue 1–2, pp 75–98 | Cite as

Political alignment and intergovernmental transfers in parliamentary systems: evidence from Germany

Article

Abstract

Combining local council election data with fiscal data on grant allocations in a German state, we study partisan favoritism in the allocation of intergovernmental transfers within a quasi-experimental framework. We hypothesize that state governments pursue two distinct goals when allocating grants to local governments: (1) helping aligned local parties win the next election and (2) buying off unaligned municipalities that may obstruct the state government’s policy agenda. We argue furthermore that the relative importance of these two goals depends on local political conditions. In line with this argument, we show empirically that the effect of political alignment on grant receipts varies depending on the degree of local support for the state government. While previous contributions find that aligned local governments always tend to receive larger transfers, our results imply that the political economy of intergovernmental transfers is more intricate.

Keywords

Intergovernmental transfers Political alignment State and local governments Fiscal federalism Quasi-parliamentarism State and local elections 

Supplementary material

11127_2016_398_MOESM1_ESM.docx (241 kb)
Supplementary material 1 (DOCX 240 kb)
11127_2016_398_MOESM2_ESM.docx (3.1 mb)
Supplementary material 2 (DOCX 3184 kb)
11127_2016_398_MOESM3_ESM.docx (69 kb)
Supplementary material 3 (DOCX 69 kb)

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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of SiegenSiegenGermany
  2. 2.Department of EconomicsUniversity of KonstanzConstanceGermany

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