This paper empirically analyses budget deviations in German municipalities, focusing on ordinary revenues and expenditures, the largest components of total budgets. Using data from the state of North Rhine-Westphalia for the timespan between 2019 and 2022, with particular emphasis on the 2020 mayoral elections, I examine the determinants of deviations between planned and realized budget figures. The results indicate that municipalities re-electing a mayor from the same party tend to plan revenues more conservatively in the pre-election year. A detailed breakdown reveals substantial heterogeneity across the disaggregated revenue and expenditure categories. This highlights the importance of a granular, category-level view to understand the drivers of budget deviations.

This study investigates how institutional features of South Korea’s education finance system influence the allocation of discretionary resources. Despite a shrinking school-age population, statutory indexing to national tax revenues has created a fiscal "windfall" in local education grants. Using a panel fixed-effects framework and a granular dataset of school-level expenditures and municipality election results, I analyze the distribution of Targeted Project Grants by elected provincial superintendents. The results reveal significant political distortions: a 1 percentage point increase in an incumbent’s prior vote share correlates with a 2.3% increase in per capita targeted funding. This "reward-based" allocation is more prevalent among progressive superintendents and typically occurs during the first half of the electoral term. These findings suggest that when fiscal constraints are relaxed, discretionary grants become primary instruments for political signaling and reciprocity rather than purely educational needs.

Regional favoritism by politicians can affect fiscal conditions of subnational governments. This raises questions regarding the implications of such differential treatment. I empirically examine potential biases in municipal fiscal oversight between municipalities familiar to the supervisor and those newly incorporated under the supervisor’s jurisdiction. Following a territorial reform in the German state of Mecklenburg-Vorpommern some municipalities were assigned to a new fiscal supervisor. This change is utilized to examine differences in oversight between municipalities known to the supervisor and those newly introduced under the supervisor’s jurisdiction. The focus lies on fiscal indicators at the municipal level that can be influenced by the supervisor through guidance and oversight. The findings indicate that municipalities unfamiliar to the supervisor increase their tax multipliers and reduce their levels of debt relative to familiar municipalities. This suggests that the supervisor may show favoritism toward familiar municipalities while imposing intensified consolidation pressure on unfamiliar municipalities.

Democratic participation and trust in public institutions have declined across many advanced democracies, prompting governments to experiment with institutional innovations that foster citizen engagement. Participatory budgeting, which enables citizens to propose, deliberate on, and vote over public spending projects, is one such reform. This paper studies whether participatory budgeting influences democratic engagement and fiscal behavior in advanced democracies. We examine its impact on social capital, trust in institutions, political participation, and local political competition, as well as on tax compliance. Conceptually, participatory budgeting may increase civic engagement and voluntary tax compliance by strengthening transparency, perceived reciprocity, and citizens’ voice in fiscal decision-making. By jointly analyzing political and fiscal outcomes, the paper contributes to understanding whether participatory institutions can reinforce democratic legitimacy and the functioning of the fiscal state.