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Direct democracy and local government efficiency

  • Asatryan, Zareh
  • De Witte, Kristof

This paper studies the role of direct democracy in ensuring efficient and cost effective provision of goods and services in the public sector. The sample consists of the population of municipalities in the German State of Bavaria, where in the mid-1990s considerable direct democratic reforms granted citizens with wide opportunities to directly participate in local affairs through binding initiatives. Using information on the municipal resources and the municipal provision of public goods, and applying a fully non-parametric approach to estimate local government overall efficiency, the analysis shows that more direct democratic activity is associated with higher government efficiency. This result suggests that more inclusive governance through direct decision-making mechanisms may induce more accountable and less inefficient governments.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 14-017.

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Date of creation: 2014
Date of revision:
Handle: RePEc:zbw:zewdip:14017
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  1. De Borger, B, et al, 1994. " Explaining Differences in Productive Efficiency: An Application to Belgian Municipalities," Public Choice, Springer, vol. 80(3-4), pages 339-58, September.
  2. Kristof De Witte & Mika Kortelainen, 2013. "What explains the performance of students in a heterogeneous environment? Conditional efficiency estimation with continuous and discrete environmental variables," Applied Economics, Taylor & Francis Journals, vol. 45(17), pages 2401-2412, June.
  3. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
  4. DE BORGER, Bruno & KERSTENS, Kristiaan, 1994. "Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA and econometric approaches," SESO Working Papers 1994002, University of Antwerp, Faculty of Applied Economics.
  5. Lorenz Blume & Jens Müller & Stefan Voigt, 2009. "The economic effects of direct democracy—a first global assessment," Public Choice, Springer, vol. 140(3), pages 431-461, September.
  6. Cazals, Catherine & Florens, Jean-Pierre & Simar, Leopold, 2002. "Nonparametric frontier estimation: a robust approach," Journal of Econometrics, Elsevier, vol. 106(1), pages 1-25, January.
  7. Rexford Santerre, 1986. "Representative versus direct democracy: A Tiebout test of relative performance," Public Choice, Springer, vol. 48(1), pages 55-63, January.
  8. Asatryan, Zareh & Baskaran, Thushyanthan & Heinemann, Friedrich, 2014. "The effect of direct democracy on the level and structure of local taxes," ZEW Discussion Papers 14-003, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Asatryan, Zareh, 2014. "The indirect effects of direct democracy: Local government size and non-budgetary voter initiatives," ZEW Discussion Papers 14-004, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Ashworth, John & Geys, Benny & Heyndels, Bruno, 2006. "Determinants of tax innovation: The case of environmental taxes in Flemish municipalities," European Journal of Political Economy, Elsevier, vol. 22(1), pages 223-247, March.
  11. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2009. "Voter involvement, fiscal autonomy and public sector efficiency: evidence from German municipalities
    [Wähler-Beteiligung, Finanzhoheit und Effizienz des öffentlichen Sektors: Aussagen von deutschen
    ," Discussion Papers, Research Unit: Market Processes and Governance SP II 2009-02, Social Science Research Center Berlin (WZB).
  12. Lars-Erik Borge & Torberg Falch & Per Tovmo, 2008. "Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity, and democratic participation," Public Choice, Springer, vol. 136(3), pages 475-495, September.
  13. Luiza Badin & Cinzia Daraio & Léopold Simar, 2008. "Optimal Bandwidth Selection for Conditional Efficiency Measures: a Data-driven Approach," LEM Papers Series 2008/22, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  14. John G. Matsusaka, 2009. "Direct Democracy and Public Employees," American Economic Review, American Economic Association, vol. 99(5), pages 2227-46, December.
  15. De Witte, Kristof & Geys, Benny, 2010. "Evaluating efficient public good provision: Theory and evidence from a generalised conditional efficiency model for public libraries," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2010-14, Social Science Research Center Berlin (WZB).
  16. Blomberg, S.B. & Hess, G.D., 1999. "The Impact of Voter Initiatives on Economic Activity," Papers 99-11, Wellesley College - Department of Economics.
  17. Cinzia Daraio & Leopold Simar, 2003. "Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach," LEM Papers Series 2003/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  18. Phuong Nguyen-Hoang, 2012. "Fiscal effects of budget referendums: evidence from New York school districts," Public Choice, Springer, vol. 150(1), pages 77-95, January.
  19. Qi Li & Jeffrey Scott Racine, 2006. "Nonparametric Econometrics: Theory and Practice," Economics Books, Princeton University Press, edition 1, volume 1, number 8355.
  20. Emrouznejad, A. & De Witte, K., 2010. "COOPER-framework: A Unified Standard Process for Non-parametric Projects," Working Papers 18, Top Institute for Evidence Based Education Research.
  21. Feld, Lars P & Savioz, Marcel R, 1997. "Direct Democracy Matters for Economic Performance: An Empirical Investigation," Kyklos, Wiley Blackwell, vol. 50(4), pages 507-38.
  22. Emrouznejad, Ali & De Witte, Kristof, 2010. "COOPER-framework: A unified process for non-parametric projects," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1573-1586, December.
  23. Adonis Yatchew, 1998. "Nonparametric Regression Techniques in Economics," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 669-721, June.
  24. Asatryan, Zareh & Baskaran, Thushyanthan & Grigoriadis, Theocharis & Heinemann, Friedrich, 2013. "Direct democracy and local public finances under cooperative federalism," ZEW Discussion Papers 13-038, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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