Government Spending and Legislative Organization: Quasi-experimental evidence from Germany

Peter Egger and Marko Koethenbuerger

No 2010-09, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: This paper presents empirical evidence of a positive effect of council size on government spending using a data set of 2,056 municipalities in the German state of Bavaria over a period of 21 years. We apply a regression discontinuity design to avoid an endogeneity bias. In particular, we exploit discontinuities in the legal rule that relates population size of a municipality to council size to identify a causal relationship between council size and public spending, and find a robust positive impact of council size on spending. Moreover, we show that municipalities primarily adjust current expenditure in response to a rise in council size.

Keywords: Legislative organization; Regression-discontinuity design; Government spending; Mayor-council system (search for similar items in EconPapers)
JEL-codes: C2 D7 H7 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2010-08
New Economics Papers: this item is included in nep-cdm
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Citations: View citations in EconPapers (89)

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Journal Article: Government Spending and Legislative Organization: Quasi-experimental Evidence from Germany (2010)
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