Tactical distribution in local funding: The value of an aligned mayor

Using Chile as a case study for understanding tactical distribution under extensive controls on expenditure, this paper examines whether political motives affect the allocation of funds from the central government to localities. Collecting local-level data of two infrastructure funding programs and using the voting gap percentage between the coalition candidate and opposition competitors in a Sharp Regression Discontinuity methodology, we find causal evidence in favor of three hypotheses: (i) a coalition criterion influences the funding allocation to the local level; (ii) an electoral cycle exists in local funding; and (iii) the degree of coalition targeting varies based on a locality's history of coalition alignment. In sum, the central government regards politically aligned mayors as valuable electoral assets, especially in municipalities historically aligned with the coalition.