scholarly journals Direct democracy and government size: evidence from Spain

2019 ◽  
Vol 8 (4) ◽  
pp. 630-645 ◽  
Author(s):  
Carlos Sanz
Keyword(s):  
Economic Policy ◽  
Special Interest ◽  
Direct Democracy ◽  
Regression Discontinuity ◽  
Public Spending ◽  
Government Size ◽  
Similar Amount ◽  
Regression Discontinuity Design ◽  
Budget Deficits ◽  
Effect Regression

AbstractI study the effects of direct democracy on economic policy in a novel setting. In Spain, national law determines that municipalities follow either direct or representative democracy, depending on their population size. Using a fixed-effect regression discontinuity design, I find that direct democracy leads to a smaller government, reducing public spending by around 8 percent. Revenues decrease by a similar amount and, therefore, there is no effect on budget deficits. These findings can be explained by a model in which direct democracy allows voters to enforce lower special-interest spending. I provide several additional results and discuss alternative mechanisms.

scholarly journals Does Electoral Competition Curb Party Favoritism?

2018 ◽  
Vol 10 (4) ◽  
pp. 378-407 ◽  
Author(s):  
Marta Curto-Grau ◽  
Albert Solé-Ollé ◽  
Pilar Sorribas-Navarro
Keyword(s):  
Local Governments ◽  
Regression Discontinuity ◽  
Electoral Competition ◽  
Public Spending ◽  
Regression Discontinuity Design ◽  
Large Margin ◽  
Spanish Regions ◽  
Previous Election

We study whether incumbents facing uncontested elections channel public spending toward co–partisan officials more than is the case of incumbents that are worried about reelection. We draw on data on capital transfers allocated by Spanish regions to local governments during 1995–2007. Using a regression discontinuity design, we document strong and robust effects. We find that a mayor belonging to the party of the regional president obtains twice the amount in grants received by an opposition’s mayor. This effect is much greater for regional incumbents that won the previous election by a large margin, but it disappears for highly competitive elections. (JEL D72, H76)

A Regression Discontinuity Design for Studying Divided Government

2020 ◽  
Vol 20 (3) ◽  
pp. 356-389
Author(s):  
Patricia A. Kirkland ◽  
Justin H. Phillips
Keyword(s):  
Real World ◽  
Regression Discontinuity ◽  
Causal Analysis ◽  
Causal Effects ◽  
Divided Government ◽  
Regression Discontinuity Design ◽  
Budget Deficits ◽  
Regression Techniques ◽  
Two Measures ◽  
Election Results

The regression discontinuity design (RDD) is a valuable tool for identifying causal effects with observational data. However, applying the traditional electoral RDD to the study of divided government is challenging. Because assignment to treatment in this case is the result of elections to multiple institutions, there is no obvious single forcing variable. Here, we use simulations in which we apply shocks to real-world election results in order to generate two measures of the likelihood of divided government, both of which can be used for causal analysis. The first captures the electoral distance to divided government and can easily be utilized in conjunction with the standard sharp RDD toolkit. The second is a simulated probability of divided government. This measure does not easily fit into a sharp RDD framework, so we develop a probability restricted design (PRD) which relies upon the underlying logic of an RDD. This design incorporates common regression techniques but limits the sample to those observations for which assignment to treatment approaches “as-if random.” To illustrate both of our approaches, we reevaluate the link between divided government and the size of budget deficits.

scholarly journals QUANTILE TREATMENT EFFECTS IN REGRESSION KINK DESIGNS

2020 ◽  
Vol 36 (6) ◽  
pp. 1167-1191
Author(s):  
Heng Chen ◽  
Harold D. Chiang ◽  
Yuya Sasaki
Keyword(s):  
Economic Policy ◽  
Statistical Inference ◽  
Treatment Effects ◽  
Regression Discontinuity ◽  
Regression Discontinuity Design ◽  
Simulation Studies ◽  
Quantile Treatment Effects ◽  
Economic Journal ◽  
Education Effects ◽  
Empirical Illustration

The literature on regression kink designs develops identification results for average effects of continuous treatments (Nielsen et al., 2010, American Economic Journal: Economic Policy 2, 185–215; Card et al., 2015, Econometrica 83, 2453–2483), average effects of binary treatments (Dong, 2018, Jump or Kink? Identifying Education Effects by Regression Discontinuity Design without the Discontinuity), and quantile-wise effects of continuous treatments (Chiang and Sasaki, 2019, Journal of Econometrics 210, 405–433), but there has been no identification result for quantile-wise effects of binary treatments to date. In this article, we fill this void in the literature by providing an identification of quantile treatment effects in regression kink designs with binary treatment variables. For completeness, we also develop large sample theories for statistical inference, present a practical guideline on estimation and inference, conduct simulation studies, and provide an empirical illustration.

scholarly journals Government Spending and Legislative Organization: Quasi-Experimental Evidence from Germany

2010 ◽  
Vol 2 (4) ◽  
pp. 200-212 ◽  
Author(s):  
Peter Egger ◽  
Marko Koethenbuerger
Keyword(s):  
Government Spending ◽  
Regression Discontinuity ◽  
Positive Impact ◽  
Public Spending ◽  
Regression Discontinuity Design ◽  
Legislative Organization ◽  
Endogeneity Bias ◽  
German State ◽  
Quasi Experimental ◽  
Positive Effect

This paper presents empirical evidence of a positive effect of council size on government spending using a dataset of 2,056 municipalities in the German state of Bavaria over a period of 21 years. We apply a regression discontinuity design to avoid an endogeneity bias. In particular, we exploit discontinuities in the legal rule that relate population size of a municipality in order to council size to identify a causal relationship between council size and public spending, and find a robust positive impact of council size on spending. Moreover, we show that municipalities primarily adjust current expenditure in response to a rise in council size. (JEL D72, H72, R51)

scholarly journals Regional Transfer Multipliers

2018 ◽  
Vol 86 (5) ◽  
pp. 1901-1934 ◽  
Author(s):  
Raphael Corbi ◽  
Elias Papaioannou ◽  
Paolo Surico
Keyword(s):  
Regression Discontinuity ◽  
Causal Effect ◽  
Public Spending ◽  
Fuzzy Regression ◽  
Regression Discontinuity Design ◽  
Allocation Mechanism ◽  
Municipal Governments ◽  
Local Labour ◽  
Income Multiplier ◽  
Fuzzy Regression Discontinuity Design

Abstract A series of discontinuities in the allocation mechanism of federal transfers to municipal governments in Brazil allow us to identify the causal effect of public spending on local labour markets, using a “fuzzy” Regression Discontinuity Design (RDD). Our estimates imply a cost per job of about 8,000 US dollars per year and a local income multiplier around two. The effect comes mostly from employment in services and is more pronounced among less financially developed municipalities.

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