Are Preferences for Fiscal Discipline Endogenous
Differences in voters' fiscal preferences are examined taking advantage of the exceptional Swiss institutional setting. Empirical evidence suggests that preferences are determined by strictly cultural patterns (cultural area measured by language). Thus, fiscal preferences can be considered as being largely exogenous. This implies that, except for special cases, it is not possible to find simple proxy variables for fiscal preferences. An ad hoc index of fiscal preferences ought to be built up when the introduction of this variable is required for comprehensive explanatory models of fiscal discipline or for other related studies. Copyright 2003 by Kluwer Academic Publishers
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