Previous empirical studies have found a positive relationship between the size of legislature and the size of government. Those studies, however, do not adequately address the concerns of endogeneity. In contrast, this paper uses variation in legislature size induced by statutory council size laws in Finland and Sweden to estimate the causal effect of legislature size on government size. These laws create discontinuities in council size at certain known thresholds of an underlying continuous variable, which make it possible to generate ?near experimental? causal estimates of the effect of council size on government size. In contrast to previous findings, I find a negative relationship between council size and government size: on average, spending and revenues are decreased by roughly 0.5 percent for each additional council member.
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Paper provided by Government Institute for Economic Research Finland (VATT) in its series Discussion Papers with number
350.
Length: Date of creation: 01 Dec 2004 Date of revision: Handle: RePEc:fer:dpaper:350
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Find related papers by JEL classification: H00 - Public Economics - - General - - - General H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law) H10 - Public Economics - - Structure and Scope of Government - - - General C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
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