Dynasties and the Political Budget Cycle

Abstract

In this paper, we provide a wide set of results which point toward a better understanding of the role of political dynasties in representative democracies. Our empirical analysis focuses on local politics in Italy, using a large sample of mayors and mayoral candidates in the period 1998-2012. We highlight the relevance of dynasties in the political arena, in terms of electoral performances and self-perpetuation. However, our main contribution is a test of whether dynastic politicians enforce different policies. Based on three different specifications (panel fixed-effects, standard regression discontinuity design on close elections and propensity-score matching), we find no effect of dynastic mayors on average spending, revenues and transfers. Conversely, we show that dynastic mayors increase spending and obtain higher transfers during the year prior to election, especially when they can run for re-election. We then discuss the mechanisms which might explain such strategic behavior.

Keywords: political dynasties, political budget cycle

JEL Classification: H11, D72