Intergovernmental Grants as a Tactical Instrument: Some Empirical Evidence from Swedish Municipalities* Eva Johansson) June, 1999 Abstract Are grants to Swedish municipalities tactical? In this essay, I derive testable implications from a theoretical voting model and test these on a panel of 255 Swedish municipalities, 1981 - 1995. In order to decide which regions that are politically powerful, both election results, and survey data from the Swedish election studies are used. The results, although somewhat ambiguous, support the hypothesis that intergovernmental grants are used in order to win votes. JEL classification: D72, H77 Keywords: political economy, tactical redistribution, intergovernmental grants * I am grateful for comments from Sören Blomquist, Vidar Christiansen, Matz Dahlberg, Torsten Persson, seminar participants at Uppsala University and workshop participants at IIES. ) Department of Economics, Uppsala University, Box 513, SE-751 20 Uppsala, Sweden, e-mail:
[email protected]. 1 1. Introduction In the field of political economics there is a growing literature claiming that redistribution is not performed on the basis of welfare maximization alone, but that it also, to a large extent, is tactically motivated (see, e.g., Meltzer & Richards, 1981; Lindbeck & Weibull, 1987; Dixit & Londregan, 1996; Grossman & Helpman, 1994). Most of the literature in this field is theoretical and it is by no means obvious how to test the models empirically since they partly build on variables such as ideological preferences, election promises and lobbying contributions that are difficult to observe and measure. The purpose of this paper is to take the step from theory to data and test empirically if intergovernmental grants to Swedish municipalities are used for pork barrel politics.