Abstract

We explore the effects of government subsidies on presidential elections in Chile in 1989-99. We use a panel with three periods (the elections of 1989, 1993, and 1999) and 229 counties. We correct for the potential simultaneity problem deriving from the fact that an incumbent facing a difficult political scenario might react by increasing subsidies to improve his/her electoral performance. Our results indicate that the greater the coverage of these types of programs (i.e., the percentage of people receiving subsidies), the higher the votes for the incumbent. © 2008 Elsevier Ltd. All rights reserved.