Research

In the world of government and politics, the interaction between the executive and the legislature raises a fundamental question: Does a larger political class enhance public finance by boosting revenues, or does it constrain expenditures and financial stability? Using unique administrative data from Italian municipalities and a generalized difference-in-difference strategy, this paper explores the fiscal impact of the roles that politicians play in local government. The study finds that a larger executive leads to increased expenditures, primarily driven by higher investments financed through capital transfers, while a larger legislature tends to constrain public spending. These patterns are understood by examining the role of specialization within a broader executive entity and the political divisions that figure within a larger council. Voters respond positively to additional spending by the executive, supporting upward career movement for the mayor and the reappointment of executive board members. On the other hand, councilors’ careers do not benefit from liberal spending behavior. This research contributes to the understanding of the complex relationship between political class size and state finances, a relationship which the literature has found to be ambiguous.

This study explores whether the advantages of larger local governments outweigh the inefficiencies associated with consolidation. Specifically, it examines an Italian policy reform that forced small municipalities to engage in inter-municipal cooperation for the provision of shared services. The analysis assesses the impact of this reform on local real estate prices, revealing a significant decline in house prices in the affected municipalities. This decrease suggests a deterioration in the quality of public goods provision. Furthermore, I find no evidence supporting alternative explanations, such as changes in taxation or housing supply, for these price fluctuations. Ultimately, the results suggest that joint management of municipal functions may be detrimental to both local governments and their residents, raising critical questions about the effectiveness of consolidation efforts. The high non-compliance rate, particularly among smaller municipalities, underscores that mandatory function sharing fails to address their specific needs. This highlights a significant gap in support, indicating that policymakers should prioritize tailored assistance to help these municipalities overcome structural and technical challenges, rather than enforcing collaboration.

Election-year fiscal cycles in centralized systems may operate not only through annual spending totals but also through the timing of budget execution. When annual appropriations are relatively constrained but the scheduling of already-authorized payments remains flexible, incumbents may respond to electoral incentives by advancing the implementation of discretionary expenditures. We study this margin using data on all Turkish provinces from 2007 to 2024, linking annual local-government outturns to quarterly expenditure flows. Our central empirical tests focus on province-level Q1 execution shares. Because local elections are held in March, the first quarter contains the immediate pre-election window. In election years, provinces execute a substantially larger share of annual capital and procurement spending in Q1, while more rigid categories such as employees' compensation exhibit little change. Annual regressions yield point estimates consistent with higher-spending election years after controlling for province fixed effects and province-specific trends, although inference weakens under province and year clustering. Descriptive quarterly profiles around the four national elections show post-election declines in flexible spending categories, reinforcing the timing interpretation. Taken together, the evidence suggests that election-year fiscal cycles operate along three margins: higher annual spending, shifts toward flexible categories, and earlier within-year execution. The results highlight how, in centralized fiscal systems, political incentives can shape not only how much governments spend, but also when authorized spending is implemented.

Over one billion people worldwide live in rural areas without access to electricity. In developing countries, while governments use electrification programs to stimulate non-agricultural employment, they may also have benefits for the agricultural sector. We estimate the impacts of India's large-scale rural electrification program on agricultural output using a difference-in-difference design and a combination of administrative and satellite data. We find that electrification leads to a 1.7% increase in agricultural output which is largely driven by the rain-fed summer cropping season. Agriculture in electrified villages becomes less sensitive to rainfall shocks, which is of growing importance given worsening environmental conditions. We provide suggestive evidence that this decline in sensitivity is due to an increase in the uptake of electric shallow tube wells, particularly at the intensive margin.