How Cable News Reshaped Local Government$
How Cable News Reshaped Local GovernmentI Sergio Gallettay, Elliott Ashy yETH Zürich Abstract Partisan cable news broadcasts have a causal effect on the size and composition of bud- gets in U.S. localities. Utilizing channel positioning as an instrument for viewership, we show that exposure to the conservative Fox News Channel shrinks local government budgets, while liberal MSNBC enlarges them. Revenue changes are driven by shifts in property taxes, a key tool for local redistributive policy. Expenditure changes are driven by public hospital expenditures, an important discretionary public good provided by lo- cal governments. We also find evidence that Fox exposure increased privatization (while MSNBC decreased it). An analysis of mechanisms suggests that the results are driven by changes in voter preferences, but not by changes in partisan control of city governments. IWe are grateful to Stefano DellaVigna, Mirko Draca, Ruben Durante, Tore Ellingsen, Benny Geys, Massimo Morelli, Suresh Naidu, Giovanni Pica, Carlo Schwarz, Alex Stremitzer, and Alois Stutzer for helpful suggestions. We have also benefited from comments by participants at the "Causes and Consequences of Populism workshop" in Bocconi (Milan), "Workshop on Political Economy" at the IEB (Barcelona), "Swiss Workshop on Local Public Finance" (Lugano), "Petralia workshop" (Petralia), EEA-ESEM conference (Manchester) and seminars at the University of Lugano, ETH Zürich and IAE- CSIC (Barcelona). We are grateful to Christian Dippel for sharing his data on city elections and to Greg Martin for sharing data on Nielsen ratings. David Cai, Romina Jafarian, Selina Lorusso, and Matteo Pinna provided excellent research assistance. This version: September 2019 (First version: April 2019) ∗Corresponding author: Sergio Galletta.
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