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Beyond the socio‐economic use of fiscal transfers: The role of political factors in Greek intergovernmental grant allocations
Author(s) -
Psycharis Yannis,
Iliopoulou Stavroula,
Zoi Maria,
Pantazis Panagiotis
Publication year - 2021
Publication title -
regional science policy and practice
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.342
H-Index - 8
ISSN - 1757-7802
DOI - 10.1111/rsp3.12319
Subject(s) - politics , local government , state (computer science) , government (linguistics) , normative , socioeconomic status , economics , public economics , empirical evidence , political science , public administration , political economy , sociology , law , population , linguistics , philosophy , demography , algorithm , computer science , epistemology
The aim of this paper is to explore the political factors lying behind the allocation of state grants to local government by providing empirical evidence from Greece. Results show that political considerations exert a statistically significant influence over the allocation of state grants to local government. Mayors politically aligned with the incumbent government receive higher shares of grants compared to the non‐aligned counterparts. Furthermore, political business cycle provides an important determinant in explaining the fluctuations in local government transfers. Grants to local government increase in the years before the national or local elections and wane over the following years. Our evidence also unveils the importance of re‐elected mayor's experience and networking in enticing fiscal allocations, thereby establishing consecutive mayoral wins as a key determinant of the municipality fiscal inducement. Collectively, contrary to the predictions of normative theory, our evidence demonstrates that political considerations rather than socioeconomic needs are able to explain the levels of grant allocations to Greek municipalities.