Do Large Cabinets Favor Large Governments? Evidence from Swiss Sub-Federal Jurisdictions

32 Pages Posted: 29 Oct 2004

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: October 2004

Abstract

The fiscal commons problem is one of the most prominent explanations of excessive spending and indebtedness in political economics. The more fragmented a government, the higher its spending, deficits and debt. In this paper we investigate to what extent this problem can be mitigated by different fiscal or constitutional institutions. We distinguish between two variants of fragmented governments: cabinet size and coalition size. Theoretically, they both describe the degree to which the costs of spending decisions are internalized by individual decision-makers. In addition, we evaluate whether constitutional rules for executive and legislation as well as budget rules shape the size of government and how the different rules interact with fragmentation in determining government size. The empirical study of the role of fragmented governments for fiscal policy outcomes is based on a panel of the 26 Swiss cantons over the 1980-1998 period. The results indicate that the number of ministers in the cabinet is negatively associated with fiscal discipline. Furthermore, the fiscal referendum does effectively restrict the fiscal commons problem, but less successfully than the budget rule.

Keywords: fragmentation, fiscal policy, referendums, legislative rules, budget rules

JEL Classification: E61, E63, H61

Suggested Citation

Feld, Lars P. and Schaltegger, Christoph A., Do Large Cabinets Favor Large Governments? Evidence from Swiss Sub-Federal Jurisdictions (October 2004). CESifo Working Paper Series No. 1294. Available at SSRN: https://ssrn.com/abstract=612141

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

Register to save articles to
your library

Register

Paper statistics

Downloads
109
Abstract Views
1,184
rank
249,965
PlumX Metrics