Controlling Government by Democratically-Elected, Competing Political Bodies

28 Pages Posted: 30 Oct 2004

See all articles by Reiner Eichenberger

Reiner Eichenberger

University of Fribourg - Faculty of Economics and Social Science; CREMA

Mark Schelker

University of Fribourg; CREMA; CESifo (Center for Economic Studies and Ifo Institute); SIAW, University of St. Gallen

Date Written: May 2006

Abstract

Controlling government is a primary focus of the politico-economic literature. Recently, various political institutions have been analyzed from this perspective, most importantly balanced budget rules, fiscal federalism, and direct democracy. However, one type of institution has been neglected so far: elected competitors to the government. Such institutional competition between the government and an independent unit can be found at the Swiss local level, where audit units compete with the government. In some parts of Switzerland, local finance commissions can ex ante criticize government projects and bring alternative policy proposals onto the political agenda, which are then voted on by the citizens. Thus, they become strong competitors to the government. We econometrically investigate this institutional setting by comparing the 26 Swiss cantons. We find the power of the local finance commission to have an economically relevant, statistically significant and robust negative effect on the tax burden and on public expenditures.

Keywords: Political economy, political control institution, institutional competition, audit court

JEL Classification: D70, H10

Suggested Citation

Eichenberger, Reiner and Schelker, Mark, Controlling Government by Democratically-Elected, Competing Political Bodies (May 2006). Available at SSRN: https://ssrn.com/abstract=605322 or http://dx.doi.org/10.2139/ssrn.605322

Reiner Eichenberger

University of Fribourg - Faculty of Economics and Social Science ( email )

Fribourg, CH 1700
Switzerland

CREMA ( email )

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

Mark Schelker (Contact Author)

University of Fribourg ( email )

Fribourg
Switzerland

CREMA ( email )

Gellertstrasse 18
Basel
Zurich, CH 8006
Switzerland

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

SIAW, University of St. Gallen ( email )

Bodanstrasse 8
Saint Gallen, St. Gallen CH-9000
Switzerland