On the vote-purchasing behavior of incumbent governments

In this paper we investigate whether there are any tactical motives behind the distribution of grants from central to lower-level governments. We use a temporary grant program that is uniquely suitable for testing theories of vote-purchasing behavior of incumbent governments. The temporary grant program differs from traditional intergovernmental grants in several aspects, most importantly, in the sovereign decision-making power given to the incumbent central government. We find support for the hypothesis that the incumbent government used the grant program understudy to win votes. In particular we find strong support for the Lindbeck-Weibull/Dixit-Londregan model, in which parties distribute transfers to regions where there are many swing voters. This result is statistically as well as economically significant. We do not, however, find any support for the model that predicts that the incumbent government transfers money to its own supporters.