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Do Large Cabinets Favor Large Governments? Evidence from Swiss Sub-Federal Jurisdictions

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Author Info
Christoph A. Schaltegger
Lars Feld ()

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Abstract

The fiscal commons problem is one of the most prominent explanations of excessive spending and indebtedness in political economics. The more fragmented a government, the higher its spending, deficits and debt. In this paper we investigate to what extent this problem can be mitigated by different fiscal or constitutional institutions. We distinguish between two variants of fragmented governments: cabinet size and coalition size. Theoretically, they both describe the degree to which the costs of spending decisions are internalized by individual decision-makers. In addition, we evaluate whether constitutional rules for executive and legislation as well as budget rules shape the size of government and how the different rules interact with fragmentation in determining government size. The empirical study of the role of fragmented governments for fiscal policy outcomes is based on a panel of the 26 Swiss cantons over the 1980-1998 period. The results indicate that the number of ministers in the cabinet is negatively associated with fiscal discipline. Furthermore, the fiscal referendum does effectively restrict the fiscal commons problem, but less successfully than the budget rule.

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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 1294.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1294

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Keywords: fragmentation fiscal policy referendums legislative rules budget rules

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Find related papers by JEL classification:
E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization
H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lars P. Feld & Gebhard Kirchgassner, 2006. "On the Effectiveness of Debt Brakes: The Swiss Experience," CREMA Working Paper Series 2006-21, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
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