Budget Referendums and Government Spending: Evidence from Swiss Cantons
Lars P. Feld
Walter Eucken Institute; University of Freiburg - College of Economics and Behavioral Sciences; CESifo (Center for Economic Studies and Ifo Institute)
John G. Matsusaka
University of Southern California - Marshall School of Business; USC Gould School of Law
CESifo Working Paper Series No. 323; and USC Finance & Business Econ. Working Paper No. 01-8
New government spending must be approved by a referendum of citizens in many Swiss cantons. This decisionmaking procedure seems like a simple way to address citizen-legislator agency problems, but little systematic evidence is available concerning its effect on spending outcomes. We estimate spending regressions for Swiss cantons using panel data from 1986 to 1997. After controlling for demographics and other determinants of spending, mandatory referendums on new spending are found to reduce the size of the budget by 17% for the median canton.
Number of Pages in PDF File: 33
Keywords: Budget referendums, initiatives, government spending
JEL Classification: H0, H3
Date posted: November 6, 2000
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