Working Papers 

Does budget transparency effectively limit the use of creative accounting to circumvent fiscal rules? Through examining a Spanish reform that limited the obligation to provide regular budget information, I study the effect of relaxing transparency rules on budget forecast errors. After the reform, municipalities with less than 5,000 inhabitants were not obligated to provide quarterly information on cumulative budget execution and forecast deviations. Using a difference-in-differences estimator in a sample of municipalities from this Madrid region between 2010−2019, I compare expenditure and revenue forecast errors between municipalities below 5,000 inhabitants (treatment group) and above 5,000 inhabitants (control group). I observe that reducing the frequency of budget reporting leads to a systematic underestimation of planned expenditures and revenues. Furthermore, most differences are found in pre- and electoral periods, indicating a political forecast cycle. I then combine the introduction of a gender quota with the transparency reform to study gender differences in budget forecast errors, finding that female politicians systematically deviate from initial expenditure projections for electoral purposes. 

Do gender differences matter for politicians’ budgetary behaviour when confronted with an exogenous change in the institutional framework? After the 2013 Spanish municipal reform, municipalities with more than 20,000 inhabitants were no longer responsible for managing the provision of social services. Using a difference-in-differences estimator in a sample of municipalities from the Madrid region for 2010−2019, we compare gender differences in social services spending before and after the reform between municipalities below 20,000 inhabitants (control group) and above 20,000 inhabitants (treatment group). Although social spending was, on average, significantly reduced in the treatment group post-reform, we observe significant differences between municipalities conditional on the gender composition of local governments, i.e. council and mayor. Whereas male-dominated governments cut social expenditure by about 20% of the total budget, gender-balanced and female-dominated governments did not. Moreover, gender-balanced governments combined with female mayors increased social services spending by 40% more than gender-balanced governments combined with male mayors. This finding supports the claim that social spending is, on average, of particular importance to female politicians, as they are willing to bend the law to uphold their interests. 

In this paper we study the impact of nitrogen oxide emission regulation on plant level emissions and firm production, prices and profitability in Germany. We exploit variation in EU emission regulation. Up to 2010, national emission ceilings were set. In 2016 this was changed to relative emission reductions that had to be achieved by 2020. We compare plants/firms that complied in 2014 already with the relative emission reduction targets to plants/firms that did not. We show that the not-yet complying firms reduced after 2016 their emissions and increased their capital as well as employment. For treated manufacturing firms, an increase in operating revenues and no change in profitability is indicated, for treated energy plants the opposite is observed.