The political budget cycle in French municipal elections: unexpected nonlinear effects
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Using a large dataset of French municipalities, this article examines the joint determination of the win margin of victory of incumbent mayors and the size of the political budget cycle. A system of two simultaneous equations is estimated with the three-stage least squares method. The main findings are twofold. First, the effects of the win margin on the size of the fiscal cycle are U-shaped. This means that, in a close election, the incumbent mayor tends to reduce public expenditure while, if the incumbent is either certain to win or to lose the election, expenditures tend to be increased. Second, another nonlinear effect is revealed, linking mayors’ time in office to their win margin of victory.
KeywordsVote function Opportunism Political budget cycles System estimation Municipalities France
JEL classificationD72 E32 H72
I wish to thank the Editor and two anonymous referees. I am also grateful to Aurelie Cassette, Etienne Farvaque, Jean-Sébastien Pentecôte, Olivier Beaumais, Arnaud Rioual, Jean Baptiste Desquilbet, Stéphane Vigeant, Abdoulaye Papa Diop and Francisco José Veiga for useful comments on previous versions of this article. The usual disclaimer applies.
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