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Title:On government centralization and fiscal referendums: a theoretical model and evidence from Switzerland PDF Logo
Authors:Feld, Lars P.
Schnellenbach, Jan
Schaltegger, Christoph A.
Issue Date:2004
Series/Report no.:Marburger volkswirtschaftliche Beiträge 2004,19
Abstract:We propose and test a positive model of fiscal federalism in which centralization is less likely to occur in jurisdictions with referendum decisions on policy centralization. Citizens choose centralization of public spending and revenue in order to internalize spillovers if individual preferences in two jurisdictions are sufficiently homogeneous. Under representative democracy, centralization is inefficiently high because representatives can extract political rents by policy centralization. Referendums thus restrict representatives’ ability for rent extraction. An empirical analysis using a panel of Swiss cantons from 1980 to 1998 supports the hypothesis that centralization is less likely under referendum decision-making.
Subjects:Centralization
Fiscal Federalism
Fiscal Referendums
JEL:H1
H7
D72
Document Type:Working Paper
Appears in Collections:Marburg Papers on Economics • Marburger Volkswirtschaftliche Beiträge, Universität Marburg

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