Vertical effects of fiscal rules: The Swiss experience

Heiko Burret () and Lars Feld

No 16/01, Freiburg Discussion Papers on Constitutional Economics from Walter Eucken Institut e.V.

Abstract: Formal fiscal rules have been introduced in many countries throughout the world. While most studies focus on the intra-jurisdictional effects of fiscal rules, vertical effects on the finances of other levels of government have yet to be explored thoroughly. This paper investigates the influence of Swiss cantonal debt brakes on municipal finances during the years 1980-2011 by examining aggregated and disaggregated local data. A Difference-in-Differences estimation (twoway fixed effects) provides little evidence that budget constraints at the cantonal level affect average municipal finances and fiscal decentralization.

Keywords: Fiscal Rule; Vertical Effect; Fiscal Shock; Decentralization; Sub-national Finances (search for similar items in EconPapers)
JEL-codes: H60 H72 H74 H77 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
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https://www.econstor.eu/bitstream/10419/125857/1/845404555.pdf (application/pdf)

Related works:
Journal Article: Vertical effects of fiscal rules: the Swiss experience (2018)
Working Paper: Vertical Effects of Fiscal Rules - The Swiss Experience (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:aluord:1601

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