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Does Direct Democracy Reduce the Size of Government? New Evidence from Historical Data, 1890–2000

Bibliographic Data

ID9704560
AuthorsPatricia Funk (0000-0002-0263-7879, Universitat Pompeu Fabra), Christina Gathmann (0000-0002-9158-0375, University of Mannheim, CESifo and IZA)
Year2011
Volume121
Issue557
Pages1252-1280
Publication date2011-12-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2011.02451.x
OpenAlexW3122054202
LanguageEN
Citations received35
References cited32

Using new historical data from Swiss cantons, we estimate the effect of direct democracy on government spending. We use fixed effects to control for unobserved heterogeneity and new instruments to address potential endogeneity concerns. We find that direct democracy constrains canton spending but its effect is more modest than previously suggested. The instrumental variable estimates show that a mandatory budget referendum reduces canton expenditures by 12%. Lowering signature requirements for the voter initiative by 1% reduces canton spending by 0.6%. We find little evidence that direct democracy at the canton level results in higher local spending or decentralisation

Control (management · Control variable · Decentralization · Democracy · Direct democracy · Econometrics · Economics · Endogeneity · Government (linguistics · Government spending · Instrumental variable · Political science · Politics · Public economics · Referendum · Statistics · Welfare · Economic Policies and Impacts · Fiscal Policies and Political Economy · Local Government Finance and Decentralization

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Unique citing works35
Citations per year1,94
Citation span2008 - 2026 (19)
Citation velocitycurrent
Highly citedNo
Citation typesNeutral: 34

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