Self-Preserving Leviathans - Evidence from Regional-Level Data

Abstract

This paper investigates the impact of the intensity of political competition on the leviathan behavior by political incumbents. Using panel data from German municipalities, we test whether the relative political strength of parties in local councils influences the spending behavior of officeholders. We find only weak evidence that strong officeholders (with weak political opponents) exhibit leviathan behavior in total government spending. Additionally, we test for political budget cycles at the local level. Here, we find strong empirical evidence that the spending pattern during a legislative period depends on the distribution of power in local councils. In municipalities with weak political competition the public spending reaches a peak in election years. The political incumbents act as self-preserving leviathans. If officeholders face politically strong opponents, they do not initiate a political budget cycle.

Keywords: political competition, local government, leviathan

JEL Classification: H610, H720, H760