The Power of Parties

53 Pages Posted: 22 Feb 2013

See all articles by Jon H. Fiva

Jon H. Fiva

Norwegian School of Management (BI) - Department of Economics

Olle Folke

Uppsala University - Department of Government

Rune J. Sørensen

BI Norwegian Business School

Date Written: February 21, 2013

Abstract

As with the market for goods and services, democratic competition involves political parties offering their services (policy programs) to citizen-consumers who vote for their preferred partisan supplier. Little is known about the partial effect of a shift in parties’ seat shares for given voter preferences, particularly in proportional representation systems. We estimate party effects using a regression discontinuity design tailored to proportional systems. Based on rich local government data, the analyses show that parties matter for fiscal policies. A larger left-wing party leads to more property taxation and higher user charges. It also leads to higher spending on child care but less on old-age care. These effects are caused both by changes in the representation of individual parties and by shifts between the party blocs.

Keywords: fiscal policy, proportional representation, regression discontinuity design

JEL Classification: C230, D720, H710, H720

Suggested Citation

Fiva, Jon H. and Folke, Olle and Sørensen, Rune J., The Power of Parties (February 21, 2013). CESifo Working Paper Series No. 4119, Available at SSRN: https://ssrn.com/abstract=2221882

Jon H. Fiva (Contact Author)

Norwegian School of Management (BI) - Department of Economics ( email )

Oslo
Norway

Olle Folke

Uppsala University - Department of Government ( email )

Scheelevägen 15 D
SE-223 70
Lund
Sweden

Rune J. Sørensen

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

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