Government Spending and Legislative Organization: Quasi-experimental evidence from Germany
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- Wp-10-09
Final published version, 258 KB, PDF document
This paper presents empirical evidence of a positive effect of council size on government spending using a data set 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 relates population size of a municipality 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.
Original language | English |
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Publisher | Department of Economics, University of Copenhagen |
Number of pages | 14 |
Publication status | Published - 2010 |
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ID: 21858919