New parties and policy outcomes: Evidence from Colombian local governments

• I study how the presence of politicians from new parties affects public finance outcomes.
• The size of government is higher in municipalities governed by a new party.
• This result relates to new parties having lower probability of reelection.

In many democracies, increasing political competition has changed the traditional party system and brought new parties into the political arena. This study examines whether the presence of politicians from new parties affects the size of government (measured by public spending and tax revenue). The study focuses on Colombian municipalities, where new parties have been numerous and successful in recent years. Regression discontinuity estimates show that public spending and tax revenues are significantly higher in municipalities governed by a mayor from a new party. Using information about local politics and the features of the new parties, I argue that this result is not associated with new party ideology, but instead relates to new parties having lower probability of reelection which raises the incentives to increase short-term rent seeking.