Fiscal Rules and the selection of politicians: theory and evidence from Italy

69 Pages Posted: 14 Sep 2017 Last revised: 19 May 2022

See all articles by Matteo Gamalerio

Matteo Gamalerio

University of Barcelona - Institut d'Economia de Barcelona (IEB)

Federico Trombetta

DISEIS, Faculty of Political and Social Sciences, Universita' Cattolica del Sacro Cuore

Date Written: May 19, 2022

Abstract

Fiscal rules, or constraints on the policymaking discretion of elected officials, are widely used to regulate fiscal policies. Using data on Italian municipalities, we employ a difference-in-discontinuity design to show a negative effect of fiscal rules on mayoral candidates’ education. The effect is driven by municipalities where fiscal rules meaningfully restrict the action space of politicians. These results are consistent with a formal model of fiscal rules and political selection and highlight a new "general equilibrium" effect of the former. Namely, reducing discretion may alleviate pork-barrel spending, but may also lower the quality of politicians.

Keywords: fiscal rules, selection of politicians, deficit, difference-in-discontinuity

JEL Classification: D72, H62, H70, H72

Suggested Citation

Gamalerio, Matteo and Trombetta, Federico, Fiscal Rules and the selection of politicians: theory and evidence from Italy (May 19, 2022). Available at SSRN: https://ssrn.com/abstract=3035437 or http://dx.doi.org/10.2139/ssrn.3035437

Matteo Gamalerio (Contact Author)

University of Barcelona - Institut d'Economia de Barcelona (IEB) ( email )

c/ Tinent Coronel Valenzuela, 1-11
Barcelona, 08034
Spain

Federico Trombetta

DISEIS, Faculty of Political and Social Sciences, Universita' Cattolica del Sacro Cuore ( email )

Largo Gemelli
1
Milano, Milano 20123
Italy

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