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

Sustainable Fiscal Policy in a Federal System Switzerland as an Example

Contents:

Author Info

  • Prof. Dr. Lars P. Feld

    ()

  • Prof. Dr. Gebhard Kirchgässner

    ()

Abstract

How a sustainable fiscal policy can be performed in a federal system is not only a Swiss problem but is also discussed in other federal countries like Germany and Austria, and in the European Union. Contrary to most other countries, the Swiss Fiscal system is characterised by an extensive fiscal federalism with high fiscal autonomy at all govermental levels, by direct popular rights which include fiscal referenda at the cantonal and local levels, and by particular constitutional and/or statutory fiscal restraints in order to prevent excessive public debt. In this paper, the effects of these consitutional clauses on public finances are investigated. Using a panel of the 26 Swiss cantons from 1980 to 1998, we provide evidence that direct democracy leads to significantly lower expenditure and revenue. The fiscal constraint, on the other hand, significantly reduces budget deficits. Total, cantonal as well as local expenditure and revneue are the lower the higher the share of local expenditure is.

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://www1.vwa.unisg.ch/RePEc/usg/dp2004/dp09_fd.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2004 with number 2004-09.

as in new window
Length:
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:usg:dp2004:2004-09

Contact details of provider:
Postal: Dufourstrasse 50, CH - 9000 St.Gallen
Phone: +41 71 224 23 25
Fax: +41 71 224 31 35
Email:
Web page: http://www.seps.unisg.ch/
More information through EDIRC

Related research

Keywords: Direct Democracy; Referenda; Initiatives;

Other versions of this item:

Find related papers by JEL classification:

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. 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.
  2. Gramlich, Edward M, 1990. "U.S. Federal Budget Deficits and Gramm-Rudman-Hollings," American Economic Review, American Economic Association, American Economic Association, vol. 80(2), pages 75-80, May.
  3. Downes, Thomas A. & Dye, Richard F. & McGuire, Therese J., 1998. "Do Limits Matter? Evidence on the Effects of Tax Limitations on Student Performance," Journal of Urban Economics, Elsevier, vol. 43(3), pages 401-417, May.
  4. Besley, Timothy & Smart, Michael, 2007. "Fiscal restraints and voter welfare," Journal of Public Economics, Elsevier, Elsevier, vol. 91(3-4), pages 755-773, April.
  5. Bruno S. Frey & Alois Stutzer, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series 246, CESifo Group Munich.
  6. Thomas Downes & David Figlio, 1998. "School Finance Reforms, Tax Limits, and Student Performance: Do Reforms Level-Up or Dumb Down?," Discussion Papers Series, Department of Economics, Tufts University, Department of Economics, Tufts University 9805, Department of Economics, Tufts University.
  7. Lars P. Feld & Christoph A. Schaltegger, 2004. "Voters as a hard budget constraint: On the determination of intergovernmental grants," Marburg Working Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200418, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  8. Christoph A. Schaltegger & Lars P. Feld, 2001. "On Government Centralization and Budget Referendums: Evidence from Switzerland," CESifo Working Paper Series 615, CESifo Group Munich.
  9. Kirchgassner, Gebhard & Pommerehne, Werner W., 1996. "Tax harmonization and tax competition in the European Union: Lessons from Switzerland," Journal of Public Economics, Elsevier, Elsevier, vol. 60(3), pages 351-371, June.
  10. Pommerehne, Werner W., 1978. "Institutional approaches to public expenditure : Empirical evidence from Swiss municipalities," Journal of Public Economics, Elsevier, Elsevier, vol. 9(2), pages 255-280, April.
  11. Feld, Lars P. & Schaltegger, Christoph A. & Schnellenbach, Jan, 2008. "On government centralization and fiscal referendums," European Economic Review, Elsevier, Elsevier, vol. 52(4), pages 611-645, May.
  12. Lars P Feld & Gebhard Kirchgässner, 2001. "The political economy of direct legislation: direct democracy and local decision-making," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 16(33), pages 329-367, October.
  13. Rodden, Jonathan, 2003. "Reviving Leviathan: Fiscal Federalism and the Growth of Government," International Organization, Cambridge University Press, Cambridge University Press, vol. 57(04), pages 695-729, September.
  14. 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.
  15. Feld, Lars P & Savioz, Marcel R, 1997. "Direct Democracy Matters for Economic Performance: An Empirical Investigation," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 50(4), pages 507-38.
  16. Figlio, David N. & Rueben, Kim S., 2001. "Tax limits and the qualifications of new teachers," Journal of Public Economics, Elsevier, Elsevier, vol. 80(1), pages 49-71, April.
  17. Feld, Lars P, 2000. " Tax Competition and Income Redistribution: An Empirical Analysis for Switzerland," Public Choice, Springer, Springer, vol. 105(1-2), pages 125-64, October.
  18. Ronald J. Shadbegian, 1999. "Fiscal Federalism, Collusion, and Government Size: Evidence from the States," Public Finance Review, , , vol. 27(3), pages 262-281, May.
  19. James M. Poterba, 1996. "Do Budget Rules Work?," NBER Working Papers 5550, National Bureau of Economic Research, Inc.
  20. Caroline Minter Hoxby, 1994. "Does Competition Among Public Schools Benefit Students and Taxpayers?," NBER Working Papers 4979, National Bureau of Economic Research, Inc.
  21. Figlio, David N., 1998. "Short-Term Effects of a 1990s-Era Property Tax Limit: Panel Evidence on Oregon's Measure 5," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 55-70, March.
  22. Bergstrom, Theodore C. & Roberts, Judith A. & Rubinfeld, Daniel L. & Shapiro, Perry, 1988. "A test for efficiency in the supply of public education," Journal of Public Economics, Elsevier, Elsevier, vol. 35(3), pages 289-307, April.
  23. 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.
  24. Lars P. Feld & John G. Matsusaka, 2000. "Budget Referendums and Government Spending: Evidence from Swiss," CESifo Working Paper Series 323, CESifo Group Munich.
  25. Sexton, Terri A. & Sheffrin, Steven M. & O’Sullivan, Arthur, 1999. "Proposition 13: Unintended Effects and Feasible Reforms," National Tax Journal, National Tax Association, vol. 52(n. 1), pages 99-112, March.
  26. Lars P. Feld & Gebhard Kirchgaessner & Christoph A. Schaltegger, 2010. "Decentralized Taxation and the Size of Government: Evidence from Swiss State and Local Governments," Southern Economic Journal, Southern Economic Association, vol. 77(1), pages 27-48, July.
  27. Downes, Thomas A. & Figlio, David N., 1999. "Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality," National Tax Journal, National Tax Association, vol. 52(n. 1), pages 113-28, March.
  28. Pommerehne, Werner W & Weck-Hannemann, Hannelore, 1996. " Tax Rates, Tax Administration and Income Tax Evasion in Switzerland," Public Choice, Springer, Springer, vol. 88(1-2), pages 161-70, July.
  29. Eijffinger, Sylvester & Haan, Jakob de, 2000. "European Monetary and Fiscal Policy," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198776161, October.
  30. Nouriel Roubini & Jeffrey Sachs, 1988. "Political and Economic Determinants of Budget Deficits in the IndustrialDemocracies," NBER Working Papers 2682, National Bureau of Economic Research, Inc.
  31. Figlio, David N., 1997. "Did the "tax revolt" reduce school performance?," Journal of Public Economics, Elsevier, Elsevier, vol. 65(3), pages 245-269, September.
  32. Ted Bergstrom & Judy Roberts & Dan Rubinfeld & Perry Shapiro, 1988. "A Test for Efficiency in the Supply of Local Public Education," Papers, University of Michigan, Department of Economics _036, University of Michigan, Department of Economics.
  33. Lars P. Feld & Horst Zimmermann & Thomas Döring, 2003. "Föderalismus, Dezentralität und Wirtschaftswachstum," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 361-377.
  34. Downes, Thomas A., 1992. "Evaluating the Impact of School Finance Reform on the Provision of Public Education: The California Case," National Tax Journal, National Tax Association, vol. 45(4), pages 405-19, December.
  35. Kiewiet, D Roderick & Szakaly, Kristin, 1996. "Constitutional Limitations on Borrowing: An Analysis of State Bonded Indebtedness," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 12(1), pages 62-97, April.
  36. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, Elsevier, vol. 33(5), pages 903-933, May.
  37. Lars P. Feld & Gebhard Kirchgassner, 1999. "Public Debt and Budgetary Procedures: Top Down or Bottom Up? Some Evidence from Swiss Municipalities," NBER Chapters, National Bureau of Economic Research, Inc, in: Fiscal Institutions and Fiscal Performance, pages 151-180 National Bureau of Economic Research, Inc.
  38. Feld, Lars P & Kirchgassner, Gebhard, 2001. " Does Direct Democracy Reduce Public Debt? Evidence from Swiss Municipalities," Public Choice, Springer, Springer, vol. 109(3-4), pages 347-70, December.
  39. Peltzman, Sam, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 327-61, May.
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. Gebhard Kirchgässner & Silika Prohl, 2008. "Sustainability of Swiss Fiscal Policy," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), Swiss Society of Economics and Statistics (SSES), vol. 144(I), pages 57-83, March.
  2. Mariana Bode & Oliver Budzinski, 2005. "Competing Ways Towards International Antitrust: the WTO versus the ICN," Marburg Working Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200503, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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:usg:dp2004:2004-09. 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: (Joerg Baumberger).

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.