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Fiscal Institutions at the Cantonal Level in Switzerland

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  • Kirchgässner, Gebhard

Abstract

In this paper, institutions are described which are designed to reach sustainability of public finances in the Swiss cantons. These are on the one hand direct popular rights, the fiscal referendum in particular, which allow citizens to express their fiscal preferences. These are on the other hand debt breaks, i.e. institutions, which prevent expenditure and revenue from drifting apart too much in order to limit possible deficits. Both together, fiscal referenda and debt breaks, allow cantons to perform a sustainable fiscal policy. This also holds – and is particularly important – for those cantons that are financially weak. That these institutions are successful is not only demonstrated by descriptive analysis but also supported by econometric analyses. Moreover, they also reduce interest payments cantons have to bear for investment expenditure. Thus, with well-designed institutions federal states might even better be able to follow a sustainable fiscal policy than unitary ones.

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  • Kirchgässner, Gebhard, 2013. "Fiscal Institutions at the Cantonal Level in Switzerland," Economics Working Paper Series 1304, University of St. Gallen, School of Economics and Political Science.
    • Handle: RePEc:usg:econwp:2013:04
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    Cited by:

    1. Baldi, Guido & Forster, Stephan, 2019. "Political Budget Cycles: Evidence from Swiss Cantons," EconStor Preprints 195930, ZBW - Leibniz Information Centre for Economics.
    2. Ankie Scott-Joseph, 2022. "Debt financing and fiscal illusion: evidence from Caribbean states," SN Business & Economics, Springer, vol. 2(9), pages 1-25, September.
    3. Heiko T. Burret & Lars P. Feld, 2018. "Vertical effects of fiscal rules: the Swiss experience," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(3), pages 673-721, June.
    4. Klaus Gründler & Niklas Potrafke, 2020. "Fiscal Rules: Historical, Modern, and Sub-National Growth Effects," CESifo Working Paper Series 8305, CESifo.

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    More about this item

    Keywords

    Sustainability; Public Debt; Fiscal Policy; Fiscal Referendum; Debt Brakes;
    All these keywords.

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing

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