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Direct Democracy, Partial Decentralization and Voter Information: Evidence from Swiss Municipalities

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  • Sergio Galletta

    (IdEP, Faculty of Economics, University of Lugano, Switzerland)

Abstract

In this paper I investigate whether changes in the availability of direct democratic institutions in local Swiss jurisdictions affect expenditure decentralization. By using a panel-based difference in differences estimation I find a statistically significant reduction in decentralization when the mandatory fiscal referendum is introduced at the local level. This result is consistent with the proposed theoretical framework. Direct democracy increases citizens' awareness of governments' behaviour which eventually affects politicians' electoral incentives. When officials from two different levels of government share the responsibility for the provision of public goods, they find it convenient for electoral purposes to favor expenditures where citizens have the lowest control over government actions.

Suggested Citation

  • Sergio Galletta, 2015. "Direct Democracy, Partial Decentralization and Voter Information: Evidence from Swiss Municipalities," IdEP Economic Papers 1501, USI Università della Svizzera italiana.
    • Handle: RePEc:lug:wpidep:1501
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    1. Galletta, Sergio & Jametti, Mario, 2015. "How to tame two Leviathans? Revisiting the effect of direct democracy on local public expenditure in a federation," European Journal of Political Economy, Elsevier, vol. 39(C), pages 82-93.
    2. Heiko T. Burret & Lars P. Feld, 2018. "Vertical effects of fiscal rules: the Swiss experience," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(3), pages 673-721, June.
    3. Galletta, Sergio, 2021. "Form of government and voters’ preferences for public spending," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 548-561.

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    More about this item

    Keywords

    Direct Democracy; Fiscal Referendum; Partial Decentralization; Vertical Interaction;
    All these keywords.

    JEL classification:

    • H76 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Other Expenditure Categories
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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