Direct democracy, partial decentralization and voter information: evidence from Swiss municipalities

Sergio Galletta

International Tax and Public Finance, 2020, vol. 27, issue 5, No 5, 1174-1197

Abstract: Abstract In this paper, I investigate whether changes in the availability of direct democratic institutions in local jurisdictions affect the decentralization of expenditures. Using a difference-in-differences estimation on a panel of 406 Swiss municipalities, I find a statistically significant reduction in decentralization when local jurisdictions introduce mandatory fiscal referenda. To rationalize this result, I propose a model of partial decentralization in which policies are mainly influenced by politicians’ electoral incentives. As direct democracy has positive effects on citizens’ awareness of governments’ behavior, in equilibrium, expenditures will be higher at the level of government at which citizens have the least control over government actions.

Keywords: Direct democracy; Fiscal referendum; Partial decentralization; Vertical interaction (search for similar items in EconPapers)
JEL-codes: D72 D78 H76 H77 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Working Paper: Direct Democracy, Partial Decentralization and Voter Information: Evidence from Swiss Municipalities (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:27:y:2020:i:5:d:10.1007_s10797-020-09599-1

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DOI: 10.1007/s10797-020-09599-1

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