The Ideological Determinants of Local Policy Reactions to the Economic Crisis

This contribution investigates the effect of local policy-makers' ideological preferences on their policy reactions to the economic crisis. It is argued that administrative capacity and objective reform pressures are not the sole determinants of reactions to the economic crisis, but that preferences are an important intervening variable in structuring policy responses. In the past, this claim was difficult to investigate as the policy preferences of local political actors are challenging to capture. This paper introduces a novel technique for estimating the policy preferences of local political parties, based on the electoral results in voting systems with panachage, i.e. systems that allows casting votes for multiple parties on a single ballot. As voters are more likely to link two parties that are ideologically similar, it is possible to exploit the collective wisdom of the electorate regarding policy positions of the elite to estimate the policy preferences of local party systems. From a substantive point of view, the project provides a comparative analysis of the municipalities' policy reactions to the economic crisis in the German state of Baden-Württemberg. The research design allows making systematic inferences across a large number of cases while controlling for several potentially intervening variables, most importantly the municipal electoral systems, which are centrally set by the state. The analysis provides evidence that the ideological make-up of the municipal councils is a crucial determinant of their policy reactions to the economic crisis regarding budget allocations and substantive policies – above and beyond administrative capacity and objective reform pressures.