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How Do Electoral Systems Affect Fiscal Policy? Evidence from State and Local Governments, 1890 to 2005

Patricia Funk
Universitat Pompeu Fabra

Christina Gathmann
University of Mannheim; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)


June 18, 2009


Abstract:     
Using a new data set from 1890 to 2000, we estimate how the adoption of proportional representation affects policies in Swiss cantons. We show that proportional systems shift spending toward broad goods (e.g. education and welfare bene…fits) but decrease spending on targetable goods (e.g. roads and agricultural subsidies). We …find little evidence that proportional representation increases the size of government. We also demonstrate that compositional changes of the legislature, i.e. party fragmentation and better representation of left-wing parties, are associated with more spending. The direct electoral incentives of proportional rule appear to reduce government spending.

Keywords: Electoral System, Proportional Rule, Fiscal Policy, Switzerland

JEL Classifications: H11, H52, H53, N44

Working Paper Series

Date posted: September 03, 2008 ; Last revised: June 22, 2009

Suggested Citation

Funk, Patricia and Gathmann, Christina, How Do Electoral Systems Affect Fiscal Policy? Evidence from State and Local Governments, 1890 to 2005 (June 18, 2009). Available at SSRN: http://ssrn.com/abstract=1260446


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Contact Information

Christina Gathmann (Contact Author)
University of Mannheim ( email )
L7,3-5
Mannheim 68131
Germany
Institute for the Study of Labor (IZA)
P.O. Box 7240
D-53072 Bonn Germany
CESifo (Center for Economic Studies and Ifo Institute for Economic Research) ( email )
Poschinger Str. 5
DE-81679 Munich Germany
HOME PAGE: http://www.stanford.edu/~cgathman
Patricia Funk
Universitat Pompeu Fabra ( email )
Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain
+34 94 5421942 (Phone)
+34 93 5421746 (Fax)
Feedback to SSRN (Beta)


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