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Does the Size of the Legislature Affect the Size of Government? Evidence from Two Natural Experiments

Per Pettersson-Lidbom ()

No 350, Discussion Papers from VATT Institute for Economic Research

Abstract: Previous empirical studies have found a positive relationship between the size of legislature and the size of government. Those studies, however, do not adequately address the concerns of endogeneity. In contrast, this paper uses variation in legislature size induced by statutory council size laws in Finland and Sweden to estimate the causal effect of legislature size on government size. These laws create discontinuities in council size at certain known thresholds of an underlying continuous variable, which make it possible to generate ?near experimental? causal estimates of the effect of council size on government size. In contrast to previous findings, I find a negative relationship between council size and government size: on average, spending and revenues are decreased by roughly 0.5 percent for each additional council member.

Keywords: Government size, legislature, regression-discontinuity design, natural experiment, Macroeconomic policy, Talouspolitiikka, International comparisons, Kansainväliset vertailut, Local public economics, Kunnallistalous, Policy analysis and modelling, Päätöksenteon tuki ja mallintaminen, C900 - Design of Experiments: General, D700 - Analysis of Collective Decision-Making: General, E600 - Macroeconomic Policy Formation; Macroeconomic Aspects of Public Finance; Macroeconomic Policy; General Outlook: General, H000 - Public Economics: General, H100 - Structure and Scope of Government: General, H300 - Fiscal Policies and Behavior of Economic Agents: General, H700 - State and Local Government; Intergovernmental Relations: General, K100 - Basic Areas of Law: General (constitutional law), P160 - Capitalist Systems: Political Economy, (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-cdm, nep-pbe and nep-reg
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Citations: View citations in EconPapers (12)

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https://www.doria.fi/handle/10024/148328

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Journal Article: Does the size of the legislature affect the size of government? Evidence from two natural experiments (2012) Downloads
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