CONICET | Buscador de Institutos y Recursos Humanos

In this paper we respond to the question of whether protests constitute an effective mechanism to induce changes in fiscal policy in the case of a developing and federal country ─Argentina─. The identification strategy consists of an instrumental variable approach ─which makes it possible toovercome the frequent concerns about reverse causality─, based on the expansion of Internet access. The results indicate that a higher frequency of protests generates an increase in discretionary transfers from the national government tothe provinces with protests. This does not translate into an improvement in the economic result or a reduction in the tax collection of those provinces. Thus, protests appear as an effective mechanism to induce changes in fiscal policy via transfers.

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