Hat in hand: Does fiscal dependence polarize electoral democracies?

Hat in hand: Does fiscal dependence polarize electoral democracies? | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Hat in hand: Does fiscal dependence polarize electoral democracies? Marcelo Castro, Tiago Cisalpino This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-4947476/v1 This work is licensed under a CC BY 4.0 License Status: Published Journal Publication published 21 Jul, 2025 Read the published version in International Tax and Public Finance → Version 1 posted 9 You are reading this latest preprint version Abstract Does the economic dependence of small jurisdictions on central government grants lead to electoral support for the central government's incumbent party? To answer this question, we explore the discontinuities in an unconditional federal grant to Brazilian municipalities to estimate the causal effects of a larger share of grants in the local budget revenue on electoral results throughout 28 years — when three rival parties came to power in succession. Higher dependence on federal grants benefits the central government party in presidential races, whereas the coalition of parties supporting the federal incumbent gains more votes in the National Congress. Enforcing small municipalities' economic reliance on unconditional grants from the central government can be a channel of political alignment — local politicians need federal representatives aligned with the federal government to request budget amendments. Larger jurisdictions can be resilient places for the opposition, as the relative size of their governments is smaller and the average income fluctuates more. JEL: H11, H72, H77 D72 Fiscal Federalism Intergovernmental grants Political Alignment Electoral Representativeness Full Text Additional Declarations No competing interests reported. Supplementary Files dataandcodes.rar Cite Share Download PDF Status: Published Journal Publication published 21 Jul, 2025 Read the published version in International Tax and Public Finance → Version 1 posted Editorial decision: Revision requested 04 Oct, 2024 Reviews received at journal 03 Oct, 2024 Reviews received at journal 30 Sep, 2024 Reviewers agreed at journal 05 Sep, 2024 Reviewers agreed at journal 04 Sep, 2024 Reviewers invited by journal 03 Sep, 2024 Editor assigned by journal 30 Aug, 2024 Submission checks completed at journal 21 Aug, 2024 First submitted to journal 20 Aug, 2024 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. 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To answer this question, we explore the discontinuities in an unconditional federal grant to Brazilian municipalities to estimate the causal effects of a larger share of grants in the local budget revenue on electoral results throughout 28 years \u0026nbsp;— \u0026nbsp;when three rival parties came to power in succession. Higher dependence on federal grants benefits the central government party in presidential races, whereas the coalition of parties supporting the federal incumbent gains more votes in the National Congress. Enforcing small municipalities' economic reliance on unconditional grants from the central government can be a channel of political alignment — local politicians need federal representatives aligned with the federal government to request budget amendments. 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