Mediating distributive politics: political alignment and electoral business cycle effects on municipality financing in Greece

Abstract

We examine the role of political alignment and the electoral business cycle on municipality revenues in Greece for the period 2003-2010. The misallocation of resources for political gain represents a waste of resources with significant negative effects on local growth and effective decentralization. The focus of our analysis is municipality mayors since they mediate the relationship between central government and voters and hence can influence the effectiveness of any potential pork-barrelling activity. A novel panel dataset combining the results of two local and three national elections with annual municipality budgets is used to run a fixed-effects econometric model. This allows us to identify whether the political alignment between mayors and central government affects municipality financing. We examine this at different stages of local and national electoral cycles, investigating both direct intergovernmental transfers (grants) and the remaining sources of local revenues (own revenues, loans). We find that total revenues are significantly higher for aligned municipalities in the run-up to elections due to higher intergovernmental transfers. We also find evidence that the 2008 crisis has reduced such pork-barrelling activity. This significant resource misallocation increases vertical networking dependency and calls for policy changes promoting greater decentralization and encouraging innovation in local revenue raising.

Publication DOI: https://doi.org/10.1007/s00168-020-01038-7
Divisions: College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship
College of Business and Social Sciences > Aston Business School > Centre for Personal Financial Wellbeing
Additional Information: © 2021, The Author(s). This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article’s Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit https://creativecommons.org/licenses/by/4.0/
Uncontrolled Keywords: distributive politics,intergovernmental grants,electoral cycles,clientelism,decentralisation,partisanship,Environmental Science(all),Social Sciences(all)
Publication ISSN: 1432-0592
Last Modified: 10 May 2024 07:15
Date Deposited: 15 Dec 2021 17:16
Full Text Link:
Related URLs: https://link.sp ... 168-020-01038-7 (Publisher URL)
http://www.scop ... tnerID=8YFLogxK (Scopus URL)
PURE Output Type: Article
Published Date: 2021-08
Published Online Date: 2021-01-29
Accepted Date: 2020-12-01
Authors: Kitsos, Anastasios (ORCID Profile 0000-0002-5338-2714)
Proestakis, Antonios

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