The market value of political partisanship. Quasi-experimental evidence from municipal elections

Do different political parties implement divergent policies which impact the citizens' welfare? The overheated debate notwithstanding, it is far from clear if this is really the case. Whereas current literature focuses on specific policy outcomes, we use real estate prices to evaluate the economic impact of municipal policies. Using a new dataset on Italian municipal elections and real estate prices, we employ a regression discontinuity (RD) approach to detect the causal effect of a change in municipal majorities. We find no difference between the effects of the policies enacted by left and right-wing parties. Further evidence from municipal balance sheets confirms that the observed differences in fiscal behaviour are hardly relevant for real estate capitalized values.