Government Spending and Legislative Organization: Quasi-experimental evidence from Germany
AbstractThis 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.
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Bibliographic InfoPaper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 2010-09.
Length: 14 pages
Date of creation: Aug 2010
Date of revision:
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Legislative organization; Regression-discontinuity design; Government spending; Mayor-council system;
Other versions of this item:
- Peter Egger & Marko Koethenbuerger, 2010. "Government Spending and Legislative Organization: Quasi-experimental Evidence from Germany," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 200-212, October.
- D7 - Microeconomics - - Analysis of Collective Decision-Making
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
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