The Interest Premium for Left Government: Regression Discontinuity Estimates Joseph T. Ornstein * , Jude C. Hays † , Robert J. Franzese, Jr. ‡ April 26, 2021 Abstract This paper employs a regression-discontinuity design (RDD) to ascertain the effects of left government on the interest-rate premium that markets build into government-bond prices. One advantage of this approach is that RDD does not require, as have some previously employed strategies, strong assumptions about how market actors form po- litical expectations, about the quality and dissemination of political information, or about functional forms or explanatory-variable selection. We expand from previous RDD studies in exploring effect heterogeneity, namely whether particular political- economic conditions produce larger or smaller interest costs of left government. Our findings suggest no or very small and insignificant partisan-government effects except under specific circumstances: sharp governing alternatives (low fragmentation, high polarization), in certain eras (around the 1950s-1970s), and for a short-term (about one year). Under these conditions of stark differences between alternative left/right governments and relatively great domestic policy autonomy, however, there is a statis- tically discernible and substantively notable government-bond yield increase after left parties enter government following close elections. * Department of Political Science, University of Georgia † Department of Political Science, University of Pittsburgh ‡ Department of Political Science, University of Michigan 1