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Is direct democracy a problem or a promise for fiscal outcomes? The case of the United States

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  • Agnese Sacchi
  • Aline Pennisi

Abstract

In time of worry for large deficits, the question on whether direct democracy can be a problem or a promise to better rule modern societies may arise. Both theoretical and empirical studies provide mixed answers. This paper investigates both the indirect (i.e. the existence) and the direct effects (i.e. the usage) of direct democracy institutions on major fiscal outcomes across the American States during 1992-2009. Being based on a more recent time span than previous contributions, our study includes more detailed information such as the type of institution, the voting result, and the topics of concern. The main results suggest that States permitting initiatives spend less than those without, confirming some previous findings. However, when initiatives are effectively used, their practice contributes to increase spending among those States allowing them. The intensity of different initiatives also matters for fiscal outcomes as well as the nature of topics involved.

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Bibliographic Info

Paper provided by Department of Economics - University Roma Tre in its series Departmental Working Papers of Economics - University 'Roma Tre' with number 0178.

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Length: 35
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:rtr:wpaper:0178

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Keywords: Voter initiatives; Fiscal policy; Positive constitutional economics; State government. (*);

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  1. Romer, Thomas & Rosenthal, Howard, 1979. "Bureaucrats versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 93(4), pages 563-87, November.
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  6. Blomberg, S.B. & Hess, G.D., 1999. "The Impact of Voter Initiatives on Economic Activity," Papers, Wellesley College - Department of Economics 99-11, Wellesley College - Department of Economics.
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  16. Henning Bohn & Robert P. Inman, 1996. "Balanced Budget Rules and Public Deficits: Evidence from the U.S. States," NBER Working Papers 5533, National Bureau of Economic Research, Inc.
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  19. Matsusaka, John G, 1995. "Fiscal Effects of the Voter Initiative: Evidence from the Last 30 Years," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 103(3), pages 587-623, June.
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