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Protestantism and Government Spending: a Negative Relationship? An Empirical Application to Swiss Cantons

Recent empirical growth literature suggests that cultural factors play a decisive role in economic development, while empirical evidence for their impact on government activity remains scant. In this paper, we conjecture based on Weber’s Protestant Ethics that ‚Protestant values’ such as self-reliance and austerity should affect both the size and scope of governments. More specifically, we hypothesize that smaller government budgets should be observable in more Protestant jurisdictions. Using a panel of sub-federal expenditure in 26 Swiss cantons from 1980 to 1998 we find supporting evidence, observing that the share of Protestants in the cantonal residential population exerts a spending dampening impact. Our results suggest that cultural factors should not be omitted from future public finance analyses.

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Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 685.

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Length: 26 pages
Date of creation: 19 Dec 2007
Date of revision:
Handle: RePEc:hhs:hastef:0685
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  1. Lars P. Feld & Justina A.V. Fischer & Gebhard Kirchgassner, 2006. "The Effect of Direct Democracy on Income Redistribution: Evidence for Switzerland," CREMA Working Paper Series 2006-24, Center for Research in Economics, Management and the Arts (CREMA).
  2. Becker, Sascha O. & Woessmann, Ludger, 2007. "Was Weber Wrong? A Human Capital Theory of Protestant Economic History," IZA Discussion Papers 2886, Institute for the Study of Labor (IZA).
  3. Christian Bjørnskov & Axel Dreher & Justina Fischer, 2007. "The bigger the better? Evidence of the effect of government size on life satisfaction around the world," Public Choice, Springer, vol. 130(3), pages 267-292, March.
  4. David Dorn & Justina Fischer & Gebhard Kirchgässner & Alfonso Sousa-Poza, 2008. "Direct democracy and life satisfaction revisited: new evidence for Switzerland," Journal of Happiness Studies, Springer, vol. 9(2), pages 227-255, June.
  5. Feld, Lars P. & Matsusaka, John G., 2003. "Budget referendums and government spending: evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 87(12), pages 2703-2724, December.
  6. Alois Stutzer, . "Demokratieindizes für die Kantone der Schweiz," IEW - Working Papers 023, Institute for Empirical Research in Economics - University of Zurich.
  7. 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.
  8. Tiago Cavalcanti & Stephen Parente & Rui Zhao, 2007. "Religion in macroeconomics: a quantitative analysis of Weber’s thesis," Economic Theory, Springer, vol. 32(1), pages 105-123, July.
  9. Weingast, Barry R, 1995. "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development," Journal of Law, Economics and Organization, Oxford University Press, vol. 11(1), pages 1-31, April.
  10. Feld, Lars P & Kirchgassner, Gebhard, 2001. " Does Direct Democracy Reduce Public Debt? Evidence from Swiss Municipalities," Public Choice, Springer, vol. 109(3-4), pages 347-70, December.
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