Do coalitions lead to higher fiscal deficits? A regression discontinuity approach

This paper studies the causal effect of the type of government on fiscal deficits in a panel of Spanish Municipalities. We follow a regression discontinuity design using the variation provided by the fact that the probability of a local government to be a single party-majority changes discontinuously when a party obtains the last seat that allows them to have more than fifty per cent of the seats of the municipality council. We find that majority governments run budgets with a surplus two percentage points greater than that of coalition governments