Do National Political Parties Matter? Evidence from Italian Municipalities
63 Pages Posted: 13 Sep 2017 Last revised: 23 Jan 2020
Date Written: January 23, 2020
Recently several countries have experienced a drop in popularity of national political parties, accompanied by the success of independent movements (e.g. “Civic Lists” in Italy). I exploit the success of “Civic Lists” in Italian municipalities and use them as a comparison group for party-affiliated politicians, to test whether national parties affect fiscal discipline. Using a Regression Discontinuity Design (RDD), I show that party-affiliated mayors are more fiscally responsible: they run lower deficits, accumulate less debt and reduce expenditures. The effect is significant only for municipalities not constrained by fiscal rules. This suggests that national parties act as a substitute for fiscal rules in constraining politicians. Besides, I provide evidence that the discipline of party-affiliated politicians is linked to better career prospects: party-affiliated mayors have a higher probability of being re-elected and better chances of being promoted to higher levels of government. Alternative stories find less support in the data.
Keywords: Party Affiliation, Independent Politicians, Fiscal Discipline, Fiscal Rules, Local Government Finance, RDD
JEL Classification: D72, H70, H72
Suggested Citation: Suggested Citation