We kindly invite you to the BICEPS/SSE Riga research seminar! It will take place on Thursday, October 31 at 17.00 in room 611 with the presentation:
“Ideology, divided governments, and fiscal policy” by Mariana Lopes Da Fonseca (University of St. Gallen), co-authored with Christian Bruns (University of Gottingen).
We study how preferences for redistribution and political alignment affect fiscal policy. For the purpose, we leverage the over-time variation in the incentives to tax resulting from an exogenous reduction in the default tax multiplier for local income taxation in Portugal. Findings show that preferences for redistribution affect post-reform income taxation. Right-leaning mayors reduce local income taxation when compared to left-leaning mayors. This result is strongest when the executive and legislative branches of the municipalities share the same ideology. In the presence of divided governments, we obtain intermediate levels of local income taxation. Results are in line with divided governments having a moderation effect on fiscal policy.
No prior registration for the seminar is necessary. For any questions about the seminar, or if you have a colleague that would like to be added to the distribution list, please write to Nicolas Gavoille.