Direct Democracy and Local Public Finances under Cooperative Federalism |
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| Authors: | Zareh Asatryan Thushyanthan Baskaran Theocharis Grigoriadis Friedrich Heinemann |
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| Affiliation: | 1. ZEW Mannheim, DE‐68161 Mannheim, Germany;2. University of G?ttingen, G?ttingen, Germany;3. Free University of Berlin, Berlin, Germany;4. ZEW Mannheim, Mannheim, Germany |
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| Abstract: | In this paper, we exploit the introduction of the right of local initiatives in the German state of Bavaria in 1995 in order to study the fiscal effects of direct democracy. Our identification strategy combines difference‐in‐differences and regression discontinuity methods: we compare municipal expenditure and revenue between pre‐ and post‐reform periods at population thresholds where the signatures needed to launch initiatives and minimum quorum requirements decrease discontinuously (difference‐in‐discontinuities design). The results suggest that stronger direct democratic institutions lead to an expansion of local government size. |
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| Keywords: | Bavaria fiscal policy local initiatives regression discontinuity D72 D78 H70 |
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