Gabriel Natividad, Universidad de Piura

Sala 113

“Organizing public investment: Evidence from close municipal elections”

Abstract: Does the organization of public investment matter for financing, investment, and performance? I exploit a 2006 law introducing an organizational innovation — investment offices at Peruvian municipalities — and close municipal electoral contests in late 2006 to implement a fuzzy local polynomial regression discontinuity framework estimating the medium-term impacts of having an investment office. Nationwide party mayors elected in close municipal contests are substantially more likely to establish an investment office than mayors of not-nationwide parties. Establishing an investment office leads to an increase in municipal staff driven by lower-level hiring, a higher reliance on external financing, lower variability in internal surplus funding, substantially larger project investments, especially those geared towards the productive sectors of the local economy, larger external agreement investments, and some positive social program outcomes.