Political Stability and Fiscal Policy Time Series Evidence for the Swiss Federal Level Since 1849

39 Pages Posted: 7 Jul 2009

See all articles by Lars P. Feld

Lars P. Feld

Walter Eucken Institute; University of Freiburg - College of Economics and Behavioral Sciences; CESifo (Center for Economic Studies and Ifo Institute)

Christoph A. Schaltegger

University of St. Gallen - CREMA

Date Written: June 2009

Abstract

This paper explores the role of political stability on fiscal policy choices in a time-series analysis over 158 years on the Swiss federal level. We argue that the fiscal-commons problem of public finances is affected by the time-horizon of a finance minister. Arguably, the incentives for an incumbent to maintain a good reputation with sound policy decisions are stronger the longer the time-horizon of a respective term. In addition, a finance minister who succeeds to stay a long time in office normally enjoys a politically powerful position towards the parliament, the administration and the interest groups to influence policy decisions. In contrast, frequent government turnover weakens the position of the finance minister.

Keywords: political stability, fiscal policy, constitutional changes

JEL Classification: H11, H50, H61, D78

Suggested Citation

Feld, Lars P. and Schaltegger, Christoph A., Political Stability and Fiscal Policy Time Series Evidence for the Swiss Federal Level Since 1849 (June 2009). CESifo Working Paper Series No. 2691. Available at SSRN: https://ssrn.com/abstract=1430289

Lars P. Feld (Contact Author)

Walter Eucken Institute ( email )

Goethestrasse 10
Freiburg im Breisgau, Baden-Württemberg D-79100
Germany

University of Freiburg - College of Economics and Behavioral Sciences ( email )

Freiburg, D-79085
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Christoph A. Schaltegger

University of St. Gallen - CREMA ( email )

Varnbuelstr. 14
Saint Gallen, St. Gallen CH-9000
Switzerland

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