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Voter preferences, direct democracy and government spending

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  • Funk, Patricia
  • Gathmann, Christina

Abstract

This article uses unique voting data on 331 federal propositions to estimate voter preferences in Swiss cantons. We document that preferences vary systematically with cantonal characteristics. In particular, cantons whose voters are more conservative, less in favor of redistribution and less supportive of public spending tend to have stronger direct democracy. We show that voter preferences have a stable and sizable effect on government spending even conditional on many observable cantonal characteristics. We then revisit the relationship between direct democracy and public spending. Once we fully control for voter preferences, the cross-sectional correlation between direct democracy and government spending declines by roughly 20%. The results in this article provide empirical support for models, in which both voter preferences and direct democratic institutions are important determinants of the size of government.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 32 (2013)
Issue (Month): C ()
Pages: 300-319

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Handle: RePEc:eee:poleco:v:32:y:2013:i:c:p:300-319

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Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Voter preferences; Direct democracy; Fiscal policy; Switzerland;

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References

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  1. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2012. "The Intergenerational Transmission of Risk and Trust Attitudes," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 645-677.
  2. Patricia Funk & Christina Gathmann, 2011. "Does Direct Democracy Reduce the Size of Government? New Evidence from Historical Data, 1890–2000," Economic Journal, Royal Economic Society, vol. 121(557), pages 1252-1280, December.
  3. Besley, Timothy J. & Case, Anne, 2002. "Political Institutions and Policy Choices: Evidence from the United States," CEPR Discussion Papers 3498, C.E.P.R. Discussion Papers.
  4. Jose Tavares, 2000. "Does Right or Left Matter? Cabinets, Credibility and Fiscal Adjustments," Econometric Society World Congress 2000 Contributed Papers 1548, Econometric Society.
  5. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2007. "Bootstrap-Based Improvements for Inference with Clustered Errors," NBER Technical Working Papers 0344, National Bureau of Economic Research, Inc.
  6. Feld, Lars P. & Matsusaka, John G., 2003. "Budget referendums and government spending: evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 87(12), pages 2703-2724, December.
  7. Peltzman, Sam, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 327-61, May.
  8. Besley, Timothy & Coate, Stephen, 2008. "Issue Unbundling via Citizens' Initiatives," International Quarterly Journal of Political Science, now publishers, vol. 3(4), pages 379-397, December.
  9. Elisabeth R. Gerber & Jeffrey B. Lewis, 2004. "Beyond the Median: Voter Preferences, District Heterogeneity, and Political Representation," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1364-1383, December.
  10. Schelker, Mark & Eichenberger, Reiner, 2010. "Auditors and fiscal policy: Empirical evidence on a little big institution," Journal of Comparative Economics, Elsevier, vol. 38(4), pages 357-380, December.
  11. Feld, Lars P. & Kirchgassner, Gebhard, 2000. "Direct democracy, political culture, and the outcome of economic policy: a report on the Swiss experience," European Journal of Political Economy, Elsevier, vol. 16(2), pages 287-306, June.
  12. Knight, Brian G., 2000. "Supermajority voting requirements for tax increases: evidence from the states," Journal of Public Economics, Elsevier, vol. 76(1), pages 41-67, April.
  13. Jeffrey Zax, 1989. "Initiatives and government expenditures," Public Choice, Springer, vol. 63(3), pages 267-277, December.
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Cited by:
  1. Patricia Funk & Christina Gathmann, 2014. "Direct Democracy as a Disciplinary Device on Excessive Public Spending," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 12(1), pages 18-23, 04.
  2. Asatryan, Zareh & Baskaran, Thushyanthan & Heinemann, Friedrich, 2014. "The effect of direct democracy on the level and structure of local taxes," ZEW Discussion Papers 14-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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