Political Partisanship and the Transmission of Fiscal Policy

Who

Francesco D'Acunto (Georgetown University)

Where

IWH, conference room and via Zoom

Personal details

Francesco D’Acunto is the A. James Clark Chair in Global Real Estate and Provost Distinguished Associate Professor of Finance at Georgetown University. His research interests are in the areas of households' beliefs and economic choices, housing and real estate, FinTech and inequalities.

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We argue that voters' political support for the ruling party shapes the transmission of fiscal policy measures that require households' action, especially when political polarization is high. We find that the take-up rates of a large-scale Indian loan-guarantee program (Mudra loans) are higher in electoral districts with higher support for the ruling party measured before the policy was designed and implemented. The divergence in take-up rates is not driven by systematic differences in the composition of electoral districts because it arose only after a pervasive campaign by the Prime Minister several months after the program's launch, which the media had covered extensively. Read more …