Advanced Search
MyIDEAS: Login to save this paper or follow this series

Government Spending and Legislative Organization: Quasi-experimental evidence from Germany

Contents:

Author Info

  • Peter Egger

    (ETH Zurich)

  • Marko Koethenbuerger

    (Department of Economics, University of Copenhagen)

Abstract

This paper presents empirical evidence of a positive effect of council size on government spending using a data set of 2,056 municipalities in the German state of Bavaria over a period of 21 years. We apply a regression discontinuity design to avoid an endogeneity bias. In particular, we exploit discontinuities in the legal rule that relates population size of a municipality to council size to identify a causal relationship between council size and public spending, and find a robust positive impact of council size on spending. Moreover, we show that municipalities primarily adjust current expenditure in response to a rise in council size.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.econ.ku.dk/eprn_epru/Workings_Papers/wp-10-09.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 2010-09.

as in new window
Length: 14 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:kud:epruwp:10-09

Contact details of provider:
Postal: Øster Farimagsgade 5, Building 26, DK-1353 Copenhagen K., Denmark
Phone: (+45) 3532 4411
Fax: +45 35 32 30 00
Email:
Web page: http://www.econ.ku.dk/epru/
More information through EDIRC

Related research

Keywords: Legislative organization; Regression-discontinuity design; Government spending; Mayor-council system;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Working Papers 13039, National Bureau of Economic Research, Inc.
  2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
  3. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
  4. 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.
  5. Schaltegger, Christoph A. & Feld, Lars P., 2009. "Do large cabinets favor large governments? Evidence on the fiscal commons problem for Swiss Cantons," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 35-47, February.
  6. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule To Estimate The Effect Of Class Size On Scholastic Achievement," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 533-575, May.
  7. Pettersson-Lidbom, Per, 2012. "Does the size of the legislature affect the size of government? Evidence from two natural experiments," Journal of Public Economics, Elsevier, vol. 96(3), pages 269-278.
  8. Bradbury, John Charles & Crain, W. Mark, 2001. "Legislative organization and government spending: cross-country evidence," Journal of Public Economics, Elsevier, vol. 82(3), pages 309-325, December.
  9. DelRossi, Alison F. & Inman, Robert P., 1999. "Changing the price of pork: the impact of local cost sharing on legislators' demands for distributive public goods," Journal of Public Economics, Elsevier, vol. 71(2), pages 247-273, February.
  10. Fernando Ferreira & Joseph Gyourko, 2009. "Do Political Parties Matter? Evidence from U.S. Cities-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 399-422, February.
  11. Reza Baqir, 2002. "Districting and Government Overspending," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1318-1354, December.
  12. David S. Lee & Enrico Moretti & Matthew J. Butler, 2004. "Do Voters Affect Or Elect Policies? Evidence from the U. S. House," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 807-859, August.
  13. Wilbert van der Klaauw, 2002. "Estimating the Effect of Financial Aid Offers on College Enrollment: A Regression-Discontinuity Approach," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1249-1287, November.
  14. Per Pettersson-Lidbom, 2008. "Do Parties Matter for Economic Outcomes? A Regression-Discontinuity Approach," Journal of the European Economic Association, MIT Press, vol. 6(5), pages 1037-1056, 09.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Florian Ade & Ronny Freier, 2011. "When Can We Trust Population Thresholds in Regression Discontinuity Designs?," Discussion Papers of DIW Berlin 1136, DIW Berlin, German Institute for Economic Research.
  2. Tuukka Saarimaa & Janne Tukiainen, 2012. "Politics in Coalition Formation of Local Governments," SERC Discussion Papers 0102, Spatial Economics Research Centre, LSE.
  3. Hirota, Haruaki & Yunoue, Hideo, 2011. "Municipal mergers and special provisions of local council members in Japan," MPRA Paper 37485, University Library of Munich, Germany.
  4. Baskaran, Thushyanthan, 2013. "Coalition governments, cabinet size, and the common pool problem: Evidence from the German states," European Journal of Political Economy, Elsevier, vol. 32(C), pages 356-376.
  5. Baskaran, Thushyanthan & da Fonseca, Mariana Lopes, 2013. "Electoral thresholds and political outcomes: Quasi-experimental evidence from a reform in Germany," Center for European, Governance and Economic Development Research Discussion Papers 177, University of Goettingen, Department of Economics.
  6. Garmann, Sebastian, 2013. "Elected or Appointed? How the Nomination Scheme of the City Manager Influences the Effects of Government Fragmentation," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79892, Verein für Socialpolitik / German Economic Association.
  7. 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.
  8. Emanuele Bracco & Alberto Brugnoli, 2012. "Runoff vs. plurality," Working Papers 23767067, Lancaster University Management School, Economics Department.
  9. Hirota, Haruaki & Yunoue, Hideo, 2013. "Does local council size affect land development expenditure? Quasi-experimental evidence from Japanese municipal data," MPRA Paper 43723, University Library of Munich, Germany.
  10. Leonzio Rizzo & Alberto Zanardi, 2012. "Single vs double ballot and party coalitions: the impact on fiscal policy. Evidence from Italy," Working Papers 2012/33, Institut d'Economia de Barcelona (IEB).
  11. Asatryan, Zareh & Baskaran, Thushyanthan & Grigoriadis, Theocharis & Heinemann, Friedrich, 2013. "Direct democracy and local public finances under cooperative federalism," ZEW Discussion Papers 13-038, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  12. Felix Arnold & Ronny Freier, 2013. "Signature Requirements and Citizen Initiatives: Quasi-Experimental Evidence from Germany," Discussion Papers of DIW Berlin 1311, DIW Berlin, German Institute for Economic Research.
  13. Hirota, Haruaki & Yunoue, Hideo, 2012. "Local government expenditure and council size: Quasi-experimental evidence from Japan," MPRA Paper 42799, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:kud:epruwp:10-09. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.