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Per Pettersson-Lidbom, Do Parties Matter for Economic Outcomes? A Regression-Discontinuity Approach, Journal of the European Economic Association, Volume 6, Issue 5, 1 September 2008, Pages 1037–1056, https://doi.org/10.1162/JEEA.2008.6.5.1037
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Abstract
A long-standing issue in political economics is to what extent party control makes a difference in determining fiscal and economics policies. This question is very difficult to answer empirically because parties are not randomly selected to govern political entities. This article uses a regression-discontinuity design, namely, party control changes discontinuously at 50% of the vote share, which can produce “near” experimental causal estimates of the effect of party control on economic outcomes. The method is applied to a large panel data set from Swedish local governments with a number of attractive features. The results show that there is an economically significant party effect: Left-wing governments spend and tax 2–3% more than right-wing governments. Left-wing governments also have 7%lower unemployment rates, which is partly due to that left-wing governments employ 4% more workers than right-wing governments.
