eThesis - School of Business electronic theses

OBJECTIVES OF THE STUDY:

The purpose of the thesis is to study do parties matter for economic outcomes. This question is approached from two different angles. The first one examines is there difference in economic outcome between left-wing and right-wing governments, the second one examines is there difference in economic outcome between single-party and coalition governments. This topic is very interesting and timely as many governments are struggling economically. Also similar study has never been done in Finland.

DATA:

The data is obtained from StatFin database of Statistics Finland (Tilastokeskus). The data set includes Finnish municipal election data, economical data and population data. All of the data is collected from year 2000 to year 2012. Total of 262 municipalities meet the qualifications of the study (e.g. no municipal mergers) resulting 3086 observations. Studying causality between economical & fiscal variables and party control is done by using naive regressions and regression discontinuity design, the latter is often used to remove endogeneity problem. Also control variables are used to remove structural bias on correlation between party control and variables.

RESULTS:

The results are ambiguous but to some extent they indicate that the single party municipal governments spend more than coalition governments and that right-wing municipal governments work more efficiently.