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The Economic Effects of Direct Democracy - A Cross-Country Assessment

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Listed author(s):
  • Stefan Voigt

    (University of Kassel)

  • Lorenz Blume

    (Economics Department, University of Kassel, Germany)

Abstract

This is the first study that assesses the economic effects of direct democratic institutions on a cross country basis. Most of the results of the former intra-country studies could be confirmed. On the basis of some 30 countries, a higher degree of direct democracy leads to lower total government expenditure (albeit insignificantly) but also to higher central government revenue. Central government budget deficits are lower in countries using direct democratic institutions. As former intra-country studies, we also find that government effectiveness is higher under strong direct-democratic institutions and corruption lower. Both labor and total factor productivity are significantly higher in countries with direct democratic institutions. The low number of observations as well as the very general nature of the variable used to proxy for direct democracy clearly call for a more fine-grained analysis of the issues.

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Paper provided by Berkeley Electronic Press in its series German Working Papers in Law and Economics with number 2006-1-1144.

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Handle: RePEc:bep:dewple:2006-1-1144
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Find related papers by 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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  7. Jessica Seddon Wallack & Alejandro Gaviria & Ugo Panizza & Ernesto H. Stein, 2002. "Political Particularism around the World," IDB Publications (Working Papers) 6494, Inter-American Development Bank.
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  13. Feld, Lars P. & Voigt, Stefan, 2003. "Economic growth and judicial independence: cross-country evidence using a new set of indicators," European Journal of Political Economy, Elsevier, vol. 19(3), pages 497-527, September.
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  15. John G. Matsusaka, 2005. "Direct Democracy Works," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 185-206, Spring.
  16. Jessica Seddon Wallack & Alejandro Gaviria & Ugo Panizza & Ernesto Stein, 2003. "Particularism around the World," World Bank Economic Review, World Bank Group, vol. 17(1), pages 133-143, June.
  17. Lars P Feld & Gebhard Kirchgässner, 2001. "The political economy of direct legislation: direct democracy and local decision-making," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 329-367, October.
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Cited by:

  1. Economou, Emmanouel/Marios/Lazaros & Kyriazis, Nicholas, 2015. "The Aetolians, the Europeans and the Pakistanis: Lessons for modern federations," MPRA Paper 62974, University Library of Munich, Germany.
  2. Economou, Emmanouel/Marios/Lazaros & Kyriazis, Nicholas & Metaxas, Theodore, 2015. "The Themistocles Naval Decree of 483/2 BCE and the Greek Referendum of 2015: A comparative analysis of choice set under direct democracy procedures," MPRA Paper 76421, University Library of Munich, Germany.

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