Brown Bag Seminar: Andras Gregor

The Effect of Political Alignment on Municipal Finances - A Natural Experiment from Hungary

Andras Gregor, CORE UCLouvain

In this paper I provide evidence from Hungary that at municipal level, the mayor's partisan alignment has no effect on public finances. To identify the possible effects of mayors on municipal expenditures and revenues I use the unexpected municipal victory of the Right in the 2006 elections in Hungary. After the elections, I cannot find any differences in spending and in taxing that were not present between municipalities even before the elections. My findings are in line with Ferreira and Gyourko (2009) results in case of American towns, however my econometric identification, propensity score matching, is different from theirs.