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Electoral rules and incentive effects of fiscal transfers: evidence from Germany

Author

Listed:
  • Peter Egger

    (ETH Zurich, CEPR & CESifo)

  • Marko Koethenbuerger

    (University of Copenhagen & CESifo)

  • Michael Smart

    (University of Toronto & CESifo)

Abstract

The impact electoral rules and fiscal equalization programs have for local public finance are separately analyzed in the literature. This paper empirically analyzes whether legislator elected under different rules respond differently to changes in fiscal incentives. Using a reform of the electoral rule and the equalization system as a natural experiment, we find that municipalities which elect legislators under proportional rule react less strongly to changes in fiscal incentives.

Suggested Citation

  • Peter Egger & Marko Koethenbuerger & Michael Smart, 2010. "Electoral rules and incentive effects of fiscal transfers: evidence from Germany," Working Papers 2010/44, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2010-44
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    References listed on IDEAS

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    Cited by:

    1. Raúl A Ponce-Rodríguez & Charles R Hankla & Jorge Martinez-Vazquez & Eunice Heredia-Ortiz, 2018. "Rethinking the Political Economy of Decentralization: How Elections and Parties Shape the Provision of Local Public Goods," Publius: The Journal of Federalism, CSF Associates Inc., vol. 48(4), pages 523-558.
    2. Florian Ade, 2014. "Do constitutions matter? Evidence from a natural experiment at the municipality level," Public Choice, Springer, vol. 160(3), pages 367-389, September.

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    More about this item

    Keywords

    Electoral rule; form of municipal government; fiscal equalization; business tax rates; comparative political economy.;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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