How to Tame Two Leviathans? Revisiting the Effect of Direct Democracy on Local Public Expenditure
AbstractWe explore how the vertical structure of direct democracy in a federal context affects expenditure decisions of sub-central governments. In so doing we revisit previous research on the effect of direct democratic institution on public policies. Particularly, the effect of upper-level (state) existence of direct democratic control on local expenditure. Empirically we exploit the fact that both states (cantons) and local governments (municipalities) enjoy a high autonomy in setting their degree of direct democracy. This allows us to take into account vertical differences between institutions, i.e. we can distinguish the effect of state direct democracy on local expenditures for municipalities with and without own direct democratic instruments. Considering 119 municipalities belonging to 22 Swiss cantons for the period 1993-2007 we highlight that municipalities without fiscal referenda belonging to cantons with fiscal referenda present higher expenditure, while the effect is much reduced and statistically significantly different for municipalities that also avail of referenda.
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Bibliographic InfoPaper provided by USI Università della Svizzera italiana in its series Quaderni della facoltà di Scienze economiche dell'Università di Lugano with number 1207.
Length: 29 pages
Date of creation: 2012
Date of revision:
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Web page: https://www.bul.sbu.usi.ch
Direct Democracy; Local Public Expenditure; Vertical Interaction;
Other versions of this item:
- Sergio Galletta & Mario Jametti, 2012. "How to Tame two Leviathans? Revisiting the Effect of Direct Democracy on Local Public Expenditure," CESifo Working Paper Series 3982, CESifo Group Munich.
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-GEO-2012-11-17 (Economic Geography)
- NEP-PBE-2012-11-17 (Public Economics)
- NEP-URE-2012-11-17 (Urban & Real Estate Economics)
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- 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.
- Agnese Sacchi & Aline Pennisi, 2013. "Is direct democracy a problem or a promise for fiscal outcomes? The case of the United States," Departmental Working Papers of Economics - University 'Roma Tre' 0178, Department of Economics - University Roma Tre.
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