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Do Political Parties Matter? Evidence from U.S. Cities

Working paper #562
Fernando Vendramel Ferreira and Joseph Gyourko

Partisan political differences have important effects on policy outcomes at the state and federal levels of government. We reexamine this issue at the local level using a new panel data set of mayoral elections in the United States. Applying a regression discontinuity design to deal with the endogeneity of the incumbent party, we find that party labels do not affect key fiscal policy outcomes of municipal governments, even though there is a large advantage to incumbency in terms of the probability of winning the next election and the margin of victory. The absence of a strong partisan impact at the local level appears due to two factors: (a) narrower differences in the parties’ preferences regarding policies relevant to city government; and (b) Tiebout-related forces provide the proper incentives for local politicians to be able to credibly commit to moderation.

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