Do more representatives improve governance? Evidence from local governments in Colombia

 

(Job Market Paper) 

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Abstract: This paper tests the hypothesis that an increase in the number of representatives can reduce government expenditures by improving the oversight of the mayor by the council. My analysis implements a Regression Discontinuity (RD) design using data from a large panel of local governments in Colombia, South America, which are administered by a mayor and a council of representatives. I find that additional representatives decrease government expenditures on average; however, I find no evidence that this increase affects the oversight on the mayor. My results persist after accounting for the number of parties with elected representatives, indicating that the estimates are not driven by changes in the party composition. Instead, I provide evidence suggesting that the results are driven by an increase in coordination costs stemming from a larger number of decision-makers. More importantly, I find no evidence that the reduction in municipal expenditures affects the provision of services such as potable water, student enrollment in elementary and high school education, and provision of health care to the low income population.

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Balanced Budget Rules and Fiscal Outcomes: Evidence from Historical Constitutions

       

with Zareh Asatryan and Thomas Stratmann.

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Abstract: This paper studies the long-run fiscal consequences of constitutional-level balanced budget rules (BBRs). Using historical data dating back to the nineteenth century and applying a difference-in-differences approach we find that the introduction of a constitutional BBR reduces government debt-to-GDP and expenditure-to-GDP ratios, on average, by around eleven and three percentage points, respectively. We do not find evidence that BBRs affect tax revenues, but show that such rules reduce the probability of experiencing a debt crisis. Additional estimates employing instrumental variable strategies for the whole sample, as well as synthetic control methods for nine selected case studies from Africa, Europe, and Latin America, suggest that the relations we find are largely causal, going from BBRs to fiscal outcomes.

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Media: Fiscal Discipline: Can Constitutions Help?, Inter-American Development Bank 

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Do local representatives constrain managers and mayors? Revisiting the evidence from European municipalities

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Abstract: Two recent empirical studies find suggestive evidence that an increase in the number of representatives in local governments might lead to better oversight of the executive (Pettersson-Lidbom, 2012; and Garmann, 2015). These results imply that a system of checks-and-balances is in place at the lowest level of governance in established democracies like Germany and Finland. It also resonates with theories of the role of division-of-powers in improving government accountability, with council-manager and council-mayor systems mimicking parliamentarian and presidential regimes. Given the relevance of these results for the public finance and political economy literature, I test for the robustness of the parameter estimates when computed using different models. I use standard methods from the RDD literature and find that some of the results are largely driven by the functional form used in these studies.