Is direct democracy a problem or a promise for fiscal outcomes? The case of the United States

Agnese Sacchi and Aline Pennisi

No 178, Departmental Working Papers of Economics - University 'Roma Tre' from Department of Economics - University Roma Tre

Abstract: In time of worry for large deficits, the question on whether direct democracy can be a problem or a promise to better rule modern societies may arise. Both theoretical and empirical studies provide mixed answers. This paper investigates both the indirect (i.e. the existence) and the direct effects (i.e. the usage) of direct democracy institutions on major fiscal outcomes across the American States during 1992-2009. Being based on a more recent time span than previous contributions, our study includes more detailed information such as the type of institution, the voting result, and the topics of concern. The main results suggest that States permitting initiatives spend less than those without, confirming some previous findings. However, when initiatives are effectively used, their practice contributes to increase spending among those States allowing them. The intensity of different initiatives also matters for fiscal outcomes as well as the nature of topics involved.

Keywords: Voter initiatives; Fiscal policy; Positive constitutional economics; State government. (*) (search for similar items in EconPapers)
JEL-codes: H71 H72 O51 P16 (search for similar items in EconPapers)
Pages: 35
Date: 2013-07
New Economics Papers: this item is included in nep-cdm, nep-pbe and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:rtr:wpaper:0178

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