Pettersson Lidbom, Per () (Dept. of Economics, Stockholm University)
Abstract
Previous empirical studies have found a positive relationship between the size of the legislature and the size of government. Those studies, however, do not adequately address the concerns of endogeneity. In contrast, this paper exploits an exogenous variation in the size of the legislature induced by a statutory law linking council size to the number of eligible voters in Swedish local governments. The statutory law can potentially create discontinuities between number of eligible voters and council size at certain known values. These discontinuities are used to construct instrumental variable estimates of the effect of council size on government size. In contrast to previous findings, the results show that an increase of the council size leads to a statistically and economically significant decrease in spending and revenues. On average, spending and revenues are decreased by roughly 0.5-0.8 percent for each additional council member.
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Publisher Info
Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number
2003:18.
Length: 34 pages Date of creation: 17 Dec 2003 Date of revision: Handle: RePEc:hhs:sunrpe:2003_0018
Contact details of provider: Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden Phone: +46 8 16 20 00 Fax: +46 8 16 14 25 Email: Web page: http://www.ne.su.se/ More information through EDIRC
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Find related papers by JEL classification: P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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