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Institutional details matter—more economic effects of direct democracy

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  • Lorenz Blume
  • Stefan Voigt

Abstract

This study contains further evidence on the economic effects of direct democratic institutions. A first study found that countries with national initiatives have higher government expenditure and are characterized by more rent-seeking activity, that the effects of direct democratic institutions become stronger if the frequency of their actual use is taken into account, and that effects are stronger in countries with weak democracies. This study sheds more light on these findings by drawing on a new dataset covering more countries and incorporating more institutional detail. The results of the earlier study are largely confirmed: mandatory referendums lower government expenditure and improve government efficiency, initiatives have the opposite effects. The incorporation of more institutional detail into the analysis shows that the increase in government expenditures connected with initiatives is primarily driven by citizen, as opposed to agenda, initiatives. Further, referendums held at both the constitutional and post-constitutional levels are correlated with larger debt. Finally, neither the possibility of a recall nor the degree to which referendum results are binding significantly affect our dependent variables. Copyright Springer-Verlag Berlin Heidelberg 2012

Suggested Citation

  • Lorenz Blume & Stefan Voigt, 2012. "Institutional details matter—more economic effects of direct democracy," Economics of Governance, Springer, vol. 13(4), pages 287-310, December.
    • Handle: RePEc:spr:ecogov:v:13:y:2012:i:4:p:287-310
    DOI: 10.1007/s10101-012-0115-9
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    5. Nadia Fiorino & Roberto Ricciuti, 2007. "Determinants of Direct Democracy," CESifo Working Paper Series 2035, CESifo.
    6. Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
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    Cited by:

    1. Zareh Asatryan, 2016. "The indirect effects of direct democracy: local government size and non-budgetary voter initiatives in Germany," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(3), pages 580-601, June.
    2. Economou, Emmanouel/Marios/Lazaros & Kyriazis, Nicholas, 2019. "Boeotians, Achaeans and Europeans. Can we learn from the ancient Greek federal experience?," MPRA Paper 91442, University Library of Munich, Germany.
    3. Seebauer, Michael, 2015. "Does direct democracy foster efficient policies? An experimental investigation of costly initiatives," FAU Discussion Papers in Economics 01/2015, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    4. John G. Matsusaka, 2018. "Public policy and the initiative and referendum: a survey with some new evidence," Public Choice, Springer, vol. 174(1), pages 107-143, January.

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    More about this item

    Keywords

    Direct democracy; Economic effects of constitutions; Positive constitutional economics; H1; H3; H5; H8;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H8 - Public Economics - - Miscellaneous Issues

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