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Cover -- Content -- I. Introduction -- II. Institutional Setup and the Domestic Fiscal Rule -- III. The Data -- IV. Identification Strategy -- V. Regression-Discontinuity Analysis -- VI. Conclusions -- References -- Figures -- 1. Log-Capital Spending per-capita by Electoral Year and Size of Municipality -- 2. Average Hiring of Municipalities (per 1,000 Inhabitants) by DSP Compliance in Previous Year (2005-2007) -- 3. Mean per-Capita Long-Term Borrowing (Accrual) of Municipalities by DSP Compliance in Previous Year (2005-2007) -- 4. Mean per-Capita Purchase of Goods and Services (Cash) of Municipalities by DSP Compliance in Previous Year (2005-2007) -- 5. Checking Continuity of the Population Distribution Around the 5,000 Inhabitant Threshold -- 6. Difference in pre- vs. post- Electoral Log-Capital Spending per capita -- 7. Checking Continuity of Covariates Around the 5,000 Inhabitant Threshold. Population below 15,000 (2004-2006) -- Tables -- 1. Summary Statistics (2004-2006) -- 2. Political Budget Cycle in log-Capital Spending of Municipalities at the DSP Threshold. RD-FE Estimates (2004-2006) -- 3. Legislative Thresholds of Municipalities (2004-2006) -- 4. Political Budget Cycle in log-Capital Spending of Municipalities at Population Thresholds Relevant for Mayor's Wage. RD-FE Estimates (2004-2006) -- Appendix -- A1. Dataset Description

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