Giulia Canzian, Antonella Ferrara (p)

Davide Luca

See extended abstract

Yannis Psycharis, Maria Zoi, Stavroula Iliopoulou, Panayotis Pantazis (p)

Tasos Kitsos

Greece is empirically justified as amongst the less fiscally autonomous countries in which municipalities rely heavily on fiscal transfers from the central government in order to cover their fixed or ordinary and exceptional financial needs. Especially with respect to the latter, which are non-formula related, Greek local governments face the central government’s discretion on the levels of grants transferred to them annually. In order to shed light on the ability of social, economic, geographical or politically-oriented incentives behind the allocation of the alternative types of grants to municipalities in Greece, this paper analyzes different sets of socio-economic, geographic and political-entrenchment variables and offers unique empirical results on the factors lying behind different types of grant allocations during the period 1999-2009. Our evidence demonstrates that different types of grants are driven from different factors; while ordinary (based on predetermined criteria) grants respond to local government socio-economic and geographical characteristics and needs, the more discretionary (unexpected and non-formula related) extraordinary grants are mainly driven from political incentives and may be used by politicians, at both local and national levels, as a tool towards gaining more votes or eliminating voting opposition groups. Apart from possible self-interest and the political power exertion effects behind grant transfers to local governments, our evidence also demonstrates the need for reforms towards a more transparent way in the allocation of extraordinary grants in Greece and the urge for reforms leading to a more justifiable way in setting such fiscal transfers.

Tasos Kitsos (p), Antonios Proestakis

Ioannis Psycharis

Electoral politics and clientelism are not new notions. Yet, the, often suspected, pork barrelling activity has been difficult to identify until recently. A relatively recent trend involves studies utilising publicly available data on resource allocation and electoral results and being able to econometrically derive evidence of clientelistic relationships between the national government and voters. However, distributive politics are often mediated by factors such as multi-level governance systems and the political business cycle. These mediators have only recently being explored in the literature.

This paper examines the role of political partisanship and the electoral cycle in the allocation of funding from the central to local government in Greece between 2003 and 2010. A panel dataset that combines data from the Greek local and national elections and municipalities’ budgets for the period 2003-2010 is used to test whether the political alignment between local and national government as well as the stage of the political business cycle impact on municipality financing.

The findings suggest that aligned municipalities receive more grants in the run-up to national elections. This is evidence of pork barrelling, stronger vertical network dependency and the political business cycle considerations in the allocation of resources. The results call for greater fiscal decentralisation in order to reduce the dependency and eradicate the use of intergovernmental transfers for political gain.