What is the effect of political coalitions on economic outcomes? : A Regression Discontinuity approach for Swedish municipalities during 1994-2017

Sammanfattning: This thesis identifies the effect of traditional political coalitions on the left-right spectrum in Swedish municipal politics on economic outcomes such as Municipal Revenues, Expenditures, Net-expenditures, Municipal Tax-rates, Unemployment, and the share of Municipal Employment. To do so, varying time spans of Swedish municipal data from 1994-2017 are used in a regression discontinuity design, basing its identification on quasi-random variation created by close municipal elections. The results indicate that the left-leaning Red-Green coalition has no isolated impact on economic variables when considering the entire sample, but seems to have a significant impact on some economic variables compared to others when the sample is restricted to decrease the number of mixed coalitions in the sample. These results indicate that the increase in mixed governing coalitions in recent years could have watered down the clear left-right dimension in Swedish politics found in previous research.