Direct Democracy and Local Public Finances Under Cooperative Federalism

20 Pages Posted: 30 Jun 2017

See all articles by Zareh Asatryan

Zareh Asatryan

ZEW – Leibniz Centre for European Economic Research

Thushyanthan Baskaran

University of Goettingen (Göttingen)

Theocharis Grigoriadis

Free University of Berlin (FUB) - Department of Business and Economics

Friedrich Heinemann

ZEW – Leibniz Centre for European Economic Research; University of Heidelberg - Alfred Weber Institute for Economics

Multiple version iconThere are 2 versions of this paper

Date Written: July 2017

Abstract

In this paper, we exploit the introduction of the right of local initiatives in the German state of Bavaria in 1995 in order to study the fiscal effects of direct democracy. Our identification strategy combines difference‐in‐differences and regression discontinuity methods: we compare municipal expenditure and revenue between pre‐ and post‐reform periods at population thresholds where the signatures needed to launch initiatives and minimum quorum requirements decrease discontinuously (difference‐in‐discontinuities design). The results suggest that stronger direct democratic institutions lead to an expansion of local government size.

Keywords: Bavaria, fiscal policy, local initiatives, regression discontinuity

JEL Classification: D72, D78, H70

Suggested Citation

Asatryan, Zareh and Baskaran, Thushyanthan and Grigoriadis, Theocharis and Heinemann, Friedrich, Direct Democracy and Local Public Finances Under Cooperative Federalism (July 2017). The Scandinavian Journal of Economics, Vol. 119, Issue 3, pp. 801-820, 2017, Available at SSRN: https://ssrn.com/abstract=2995194 or http://dx.doi.org/10.1111/sjoe.12169

Zareh Asatryan (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Thushyanthan Baskaran

University of Goettingen (Göttingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Theocharis Grigoriadis

Free University of Berlin (FUB) - Department of Business and Economics ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany

Friedrich Heinemann

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

HOME PAGE: http://www.zew.de

University of Heidelberg - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
210
PlumX Metrics