Merged Municipalities, Higher Debt: On Free-riding and the Common Pool Problem in Politics
We use the 1952 Swedish municipal amalgamation reform to study free-riding and the common pool problem in politics. We expect municipalities that were affected by the reform to increase their debt in anticipation of a merger, and this effect to be larger if they were merged with many other populous municipalities (i.e. facing a large common pool). We use ordinary least squares and matching on the complete cross section of rural municipalities for the period 1947-1951, fixed effects when exploiting the panel features, as well as a geographical instrumental variables strategy. We find an average treatment effect close to the amount that the average merged municipality increased its debt with during this period, which corresponds to 2.8 percent of average income or 63 percent of the average increase in income. However, we do not find larger increases in municipalities that were part of a larger common pool.
|Date of creation:||22 Nov 2006|
|Date of revision:|
|Publication status:||Published in Public Choice, 2010, pages 157-172.|
|Contact details of provider:|| Postal: |
Phone: +46 8 665 4500
Fax: +46 8 665 4599
Web page: http://www.ifn.se/
More information through EDIRC
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.:
- Crain, W Mark, 1999. "Districts, Diversity, and Fiscal Biases: Evidence from the American States," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 675-98, October.
- Gilligan, Thomas W & Matsusaka, John G, 1995. "Deviations from Constituent Interests: The Role of Legislative Structure and Political Parties in the States," Economic Inquiry, Western Economic Association International, vol. 33(3), pages 383-401, July.
- Bolton, Patrick & Roland, Gerard, 1997.
"The Breakup of Nations: A Political Economy Analysis,"
The Quarterly Journal of Economics,
MIT Press, vol. 112(4), pages 1057-90, November.
- Bolton, Patrick & Roland, Gérard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
- Alberto Alesina & Enrico Spolaore, 1995.
"On the Number and Size of Nations,"
NBER Working Papers
5050, National Bureau of Economic Research, Inc.
- Gilligan, Thomas W. & Matsusaka, John G., 2001. "Fiscal Policy, Legislature Size, and Political Parties: Evidence from State and Local Governments in the First Half of the 20th Century," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 57-82, March.
- Bradbury, John Charles & Crain, W. Mark, 2001. "Legislative organization and government spending: cross-country evidence," Journal of Public Economics, Elsevier, vol. 82(3), pages 309-325, December.
- Tyrefors, Björn, 2006. "Do Politicians Free-ride? - an empirical test of the common pool model," SSE/EFI Working Paper Series in Economics and Finance 626, Stockholm School of Economics, revised 19 Sep 2006.
- Tyrefors Hinnerich, Björn, 2009. "Do merging local governments free ride on their counterparts when facing boundary reform?," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 721-728, June.
- Bradbury, John Charles & Stephenson, E Frank, 2003. " Local Government Structure and Public Expenditures," Public Choice, Springer, vol. 115(1-2), pages 185-98, April.
- Pettersson-Lidbom, Per, 2012.
"Does the size of the legislature affect the size of government? Evidence from two natural experiments,"
Journal of Public Economics,
Elsevier, vol. 96(3), pages 269-278.
- Per Pettersson-Lidbom, 2004. "Does the Size of the Legislature Affect the Size of Government? Evidence from Two Natural Experiments," Discussion Papers 350, Government Institute for Economic Research Finland (VATT).
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004.
"How Much Should We Trust Differences-in-Differences Estimates?,"
The Quarterly Journal of Economics,
MIT Press, vol. 119(1), pages 249-275, February.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0679. 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: (Elisabeth Gustafsson)
If references are entirely missing, you can add them using this form.