Direct democracy and government size: evidence from Spain

Carlos Sanz

No 1709, Working Papers from Banco de España

Abstract: Direct democracy is spreading across the world, but little is known about its effects on policy. I provide evidence from a unique scenario. In Spain, national law determines that municipalities follow either direct or representative democracy, depending on their population. Regression discontinuity estimates indicate that direct democracy leads to smaller government, reducing public spending by around 8%. Public revenue decreases by a similar amount and, therefore, there is no effect on budget defi cits. These fi ndings can be explained by a model in which direct democracy allows voters to enforce lower specialinterest spending.

Keywords: public finance; political economy; direct democracy; government spending; deficits; budget; regression discontinuity (search for similar items in EconPapers)
JEL-codes: D7 H (search for similar items in EconPapers)
Pages: 77 pages
Date: 2017-03
New Economics Papers: this item is included in nep-cdm and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Direct democracy and government size: evidence from Spain (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1709

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