On Government Centralization and Fiscal Referendums: A Theoretical Model and Evidence from Switzerland
We propose and test a positive model of fiscal federalism in which centralization is less likely to occur in jurisdictions with referendum decisions on policy cen-tralization. Citizens choose centralization of public spending and revenue in order to internalize spillovers if individual preferences in two jurisdictions are suffi-ciently homogeneous. Under representative democracy, centralization is ineffi-ciently high because representatives can extract political rents by policy centrali-zation. Referendums thus restrict representatives' ability for rent extraction. An empirical analysis using a panel of Swiss cantons from 1980 to 1998 supports the hypothesis that centralization is less likely under referendum decision-making.
Year of publication: |
2005
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Authors: | Feld, Lars P. ; Schaltegger, Christoph A. ; Schnellenbach, Jan |
Publisher: |
Basel : Center for Research in Economics, Management and the Arts (CREMA) |
Subject: | Centralization | Fiscal Federalism | Fiscal Referendums |
Saved in:
freely available
Series: | CREMA Working Paper ; 2005-18 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | hdl:10419/214332 [Handle] RePEc:cra:wpaper:2005-18 [RePEc] |
Classification: | H1 - Structure and Scope of Government ; H7 - State and Local Government; Intergovernmental Relations ; D72 - Economic Models of Political Processes: Rent-Seeking, Elections, Legistures, and Voting Behavior |
Source: |
Persistent link: https://www.econbiz.de/10012168216