On Government Centralization and Budget Referendums: Evidence from Switzerland

Christoph Schaltegger and Lars Feld

No 615, CESifo Working Paper Series from CESifo

Abstract: Previous theoretical and empirical research has shown that policymakers have an incentive to centralize government activities in order to weaken the com-petitive pressure of fiscal federalism. We propose and test a positive model of fiscal federalism in which centralization is less likely to occur where budget referendums are possible. The reason for this result is that budget referendums reduce the extent to which pro-centralization regions can commit to a low level of spending delegating the centralization choice to elected poli-cymakers. In addition, it reduces the ability of higher level policy-makers to attract additional responsibilities in order to gain policy discretion. Empi-rical findings from a panel data analysis for Swiss cantons from 1980 to 1998 support this hypothesis.

Keywords: centralization; fiscal federalism; budget referendums (search for similar items in EconPapers)
JEL-codes: D72 H10 H70 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (30)

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