Social and/or political involvement within the population is often argued to enhance public sector performance. The underlying idea is that engagement fosters political awareness and interest and increases the public's monitoring ability. Still, although extensive voter involvement may put pressure on policy-makers, it might also send a vague message in that diverging objectives are likely to exist in different groups. Furthermore, weak fiscal autonomy can undermine voters' interest in and demand for an efficient production of public services. In our contribution, we test whether and how voter involvement in the political sphere is related to government performance in terms of its efficiency using a broad panel of German municipalities. Our results suggest that voter involvement indeed has a positive impact on (technical) efficiency. Crucially, however, this efficiency-enhancing effect of voter involvement is significantly (positively) affected by local governments' fiscal autonomy.
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German municipalities are expected to suffer from (often significant) population losses in the upcoming decades. We assess these local governments' vulnerability to the fiscal consequences of this demographic decline through two means (using a sample of 1021 municipalities in the state of Baden-Württemberg). First, we consider local government cost efficiency. This indicates that there is a substantial divergence in efficiency despite a homogeneous institutional setting, leaving at least some mainly smaller municipalities vulnerable to adverse demographic/financial shocks. Secondly, we estimate the elasticity of local government cost functions to population size. We find that costs rise (fall) underproportionally with population size for small municipalities, whereas this is less the case for larger municipalities. This implies that especially small municipalities are vulnerable to increasing cost pressures under declining population. The overall implication is that large German municipalities (over 10.000 inhabitants) will more easily be able to cope with the expected population decline than smaller ones, supporting a case for boundary reviews or more extensive inter-communal cooperation.
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This article evaluates German local governments' cost efficiency using a sample of 1,021 municipalities in the state of Baden-Württemberg for the year 2001. We thereby concentrate on overall or 'global' efficiency scores—rather than estimate efficiency for one particular service—and explicitly account for exogenous or non-discretionary influences. The latter not only corrects for influences possibly beyond the control of local policy-makers, but also allows some indication of the determinants of such 'global' efficiency. Our results indicate that there is a substantial divergence in efficiency across municipalities despite a homogeneous institutional setting. As especially smaller municipalities appear less efficient, these results support a case for policy programmes aimed at boundary reviews or more extensive inter-communal cooperation among small municipalities.
There is a growing empirical literature studying whether fiscal rules reduce borrowing costs. Nevertheless, it remains an open question whether these rules are effective genuinely or just because they mirror fiscal preferences of politicians and voters. In our analysis of European bond spreads, we shed light on this issue by employing several types of stability preference related proxies. These proxies refer to a country's past stability performance, government characteristics and survey results related to general trust. We find evidence that these preference indicators have an influence on risk premia and dampen the measurable impact of fiscal rules. Yet, the interaction of stability preferences and rules points to a particular potential of fiscal rules in countries with a historically low stability culture.
There is a growing empirical literature studying whether fiscal rules reduce borrowing costs. Nevertheless, it remains an open question whether these rules are effective genuinely or just because they mirror fiscal preferences of politicians and voters. In our analysis of European bond spreads, we shed light on this issue by employing several types of stability preference related proxies. These proxies refer to a country's past stability performance, government characteristics and survey results related to general trust. We find evidence that these preference indicators have an influence on risk premia and dampen the measurable impact of fiscal rules. Yet, the interaction of stability preferences and rules points to a particular potential of fiscal rules in countries with a historically low stability culture.
Social and/or political involvement within the population is often argued to enhance public sector performance. The underlying idea is that engagement fosters political awareness and interest and increases the public's monitoring ability. Still, weak fiscal autonomy can undermine voters' interest in and demand for an efficient production of public services. In our contribution, we test whether and how voter involvement in the political sphere is related to government performance - in terms of its efficiency - using a broad panel of German municipalities. Our results suggest that voter involvement indeed has a positive impact on cost efficiency. Crucially, however, this efficiency-enhancing effect of voter involvement is significantly positively affected by local governments' fiscal autonomy. [Copyright Elsevier B.V.]
Social and/or political involvement within the population is often argued to enhance public sector performance. The underlying idea is that engagement fosters political awareness and interest and increases the public's monitoring ability. Still, weak fiscal autonomy can undermine voters' interest in and demand for an efficient production of public services. In our contribution, we test whether and how voter involvement in the political sphere is related to government performance – in terms of its efficiency – using a broad panel of German municipalities. Our results suggest that voter involvement indeed has a positive impact on cost efficiency. Crucially, however, this efficiency-enhancing effect of voter involvement is significantly positively affected by local governments' fiscal autonomy. ; Häufig wird argumentiert, dass eine soziale und politische Beteiligung der Bevölkerung die Effizienz des öffentlichen Sektors fördert. Die grundlegende Idee ist, dass dieses Engagement politisches Bewusstsein und Interesse fördert und somit die Möglichkeiten der Öffentlichkeit zur Kontrolle erhöht. Allerdings untergräbt eine schwache Finanzhoheit das Interesse der Wähler und ihre Nachfrage nach einer effizienten Produktion öffentlicher Leistungen. In unserem Beitrag testen wir anhand eines breiten Panels deutscher Kommunen, ob und wie die Beteiligung von Wählern in der politischen Sphäre im Zusammenhang zum Leistungsverhalten einer Regierung – im Hinblick auf Effizienz – steht. Unsere Ergebnisse deuten darauf, dass sich die Beteiligung der Wähler tatsächlich positiv auf die Kosteneffizienz auswirkt. Entscheidend ist jedoch, dass dieser Effizienzfördernde Effekt der Wählerbeteiligung signifikant positiv von der Finanzautonomie der kommunalen Regierungen beeinflusst wird.
German municipalities are expected to suffer from intense demographic changes in the upcoming decades; not only in the form of population losses, but also through a changing demographic structure (i.e. less children and adolescents, more elderly, higher dependency ratio, and so on). We assess local governments' vulnerability to the fiscal consequences of these demographic transformations (using a sample of 1021 municipalities in the state of Baden-Württemberg) by determining the elasticity of local government cost functions to municipalities' demographic characteristics. Our findings indicate that smaller municipalities are especially vulnerable to increasing cost pressures following most of the currently predicted demographic changes. In the absence of increased higher-level government support (e.g. through the fiscal equalization scheme), these findings would support a case for boundary reviews or more extensive inter-communal cooperation. ; Deutsche Stadtverwaltungen werden erwartungsgemäß in den kommenden Jahrzehnten unter einem demographischen Wandel zu leiden haben, welcher nicht nur in Form eines allgemeinen Bevölkerungsrückgangs, sondern auch durch einen Wandel in der demographischen Struktur (d.h. veränderte Altersstruktur durch weniger Junge und mehr Alte, höhere Abhängigkeitsrate usw.) zum Ausdruck kommt. Wir untersuchen die diesbezügliche Anfälligkeit von dezentralen Regierungen (zugrunde liegt eine Stichprobe von 1021 Stadt- und Gemeindeverwaltungen im Land Baden-Württemberg), indem wir die Elastizität der Kostenfunktionen bezüglich der demographischen Charakteristika der jeweiligen Stadt- und Gemeindeverwaltungen bestimmen. Unsere Ergebnisse deuten darauf hin, dass gerade kleinere Gemeinden unter dem steigenden Kostendruck leiden, der mit den meisten vorhergesagten demographischen Veränderungen einhergeht. Wenn keine übergeordnete Regierungsebene diese kleineren Verwaltungsgebiete unterstützt (z.B. durch ein Finanzausgleichsystem), dann unterstützen unsere Ergebnisse eine kritische Überprüfung von fiskalischen Grenzen bzw. der Ausweitung der inter-kommunalen Kooperation.
Social and/or political involvement within the population is often argued to enhance public sector performance. The underlying idea is that engagement fosters political awareness and interest and increases the public?s monitoring ability. Still, although extensive voter involvement may put pressure on policy-makers, it might also send a vague message in that diverging objectives are likely to exist in different groups. Furthermore, weak fiscal autonomy can undermine voters? interest in and demand for an efficient production of public services. In our contribution, we test whether and how voter involvement in the political sphere is related to government performance – in terms of its efficiency – using a broad panel of German municipalities. Our results suggest that voter involvement indeed has a positive impact on (technical) efficiency. Crucially, however, this efficiency-enhancing effect of voter involvement is significantly (positively) affected by local governments? fiscal autonomy. ; In den letzten 15 Jahren hat sich ein Literaturstrang entwickelt, der den positiven Einfluss von Sozialkapital auf das Leistungsverhalten des öffentlichen Sektors herausstellt. Danach erhöht das Engagement der Bürger im gesellschaftlichen Leben nicht nur das Interesse an sowie das Verständnis für Politik, sondern es führt auch dazu, dass die Bürger eher dazu neigen, eine ?gute? und effiziente Politik einzufordern. Diese Aussage besitzt jedoch nur dann Gültigkeit, wenn zwei entscheidende Annahmen erfüllt sind: Zum einen sollte das soziale Engagement das politische Bewusstsein und Interesse wecken, zum anderen sollte die erhöhte Anteilnahme sowie das erhöhte Interesse an politischen Prozessen zu einer Steigerung der Effizienz der Amtsinhaber oder der amtierenden Regierung führen. Während die erste Annahme bereits in zahlreichen Untersuchungen belegt wurde, wurde die zweite Annahme bisher nur in sehr wenigen Arbeiten untersucht. Dieser Beitrag stellt den Versuch dar, diese Lücke zu schließen. Mithilfe eines umfangreichen Panels von deutschen (baden-württembergischen) Gemeinden wird in dieser Studie empirisch untersucht, ob eine erhöhte Anteilnahme der Bürger an politischen Prozessen ? was als ein Teilaspekt des gesamten ?Sozialkapital-Bereichs? angesehen werden kann ? das Leistungsverhalten des öffentlichen Sektors tatsächlich erhöht, wobei ein ?gutes? Leistungsverhalten (hier) dadurch charakterisiert ist, dass die jeweilige Gebietskörperschaft auf oder sehr nahe an ihrer Effizienzgrenze operiert. Die Effizienzanalyse bezieht sich dabei auf die Gesamtheit aller Aufgaben einer Gebietskörperschaft (hier: einer Gemeinde) und nicht auf einzelne Teilbereiche wie beispielsweise der Abfallbeseitigung, der Verwaltung oder des Straßenbaus. Des Weiteren wird in dieser Studie untersucht, wie sich eine erhöhte Anteilnahme an politischen Prozessen in Gebietskörperschaften, die durch eine höhere fiskalische Autonomie gekennzeichnet und somit weniger von Finanzzuweisungen abhängig sind, auf die Effizienz auswirkt. Denn Bürger (oder Wähler), die in fiskalisch autonomeren Gebietskörperschaften wohnen, werden effektiver mit dem ?tatsächlichen? Steuerpreis der öffentlichen Güter und Dienstleistungen konfrontiert. Die empirische Analyse zeigt, dass eine erhöhte Anteilnahme der Bürger an politischen Prozessen ? gemessen durch (1) die Wahlbeteiligung, (2) die Existenz so genannter ?Freier Wählervereinigungen? im Gemeinde- oder Stadtrat (=Zusammenschlüsse von Personen, die Zwecks Durchsetzung gemeinsamer politischer Ziele zu einer Wahl auf kommunaler Ebene antreten) und (3) den Anteil der Wahlberechtigten an der Gesamtbevölkerung (einer Gemeinde) ? tatsächlich zu einer Steigerung der Effizienz der Amtsinhaber führt. Darüber hinaus wird aufgezeigt, dass dieser Effekt in fiskalisch autonomeren Gemeinden bzw. Städten deutlich höher ausfällt. Letzteres Ergebnis könnte dadurch begründet sein, dass eine (politisch) aktivere Bürgerschaft mehr Wert auf eine korrekte und sachgerechte Verwendung der öffentlichen Mittel legt, wenn diese Gelder nicht etwa in Finanzzuweisungen (von anderen Gebietskörperschaften) ihren Ursprung haben, sondern von eigenen Steuereinnahmen abstammen.
German municipalities are expected to suffer from (often significant) population losses in the upcoming decades. We assess these local governments? vulnerability to the fiscal consequences of this demographic decline through two means (using a sample of 1021 municipalities in the state of Baden-Württemberg). First, we consider local government cost efficiency. This indicates that there is a substantial divergence in efficiency despite a homogeneous institutional setting, leaving at least some – mainly smaller – municipalities vulnerable to adverse demographic/financial shocks. Secondly, we estimate the elasticity of local government cost functions to population size. We find that costs rise (fall) underproportionally with population size for small municipalities, whereas this is less the case for larger municipalities. This implies that especially small municipalities are vulnerable to increasing cost pressures under declining population. The overall implication is that large German municipalities (over 10.000 inhabitants) will more easily be able to cope with the expected population decline than smaller ones, supporting a case for boundary reviews or more extensive inter-communal cooperation.
We investigate the political determinants of risk premiums which sub-national governments in Switzerland have to pay for their sovereign bond emissions. For this purpose we analyse financial market data from 288 tradable cantonal bonds in the period from 1981 to 2007. Our main focus is on two different institutional factors. First, many of the Swiss cantons have adopted strong fiscal rules. We find evidence that both the presence and the strength of these fiscal rules contribute significantly to lower cantonal bond spreads. Second, we study the impact of a credible no-bailout regime on the risk premia of potential guarantors. We make use of the Leukerbad court decision in July 2003 which relieved the cantons from backing municipalities in financial distress, thus leading to a fully credible no-bailout regime. Our results show that this break lead to a reduction of cantonal risk premia by about 25 basis points. Moreover, it cut the link between cantonal risk premia and the financial situation of the municipalities in its canton which existed before. This demonstrates that a not fully credible no-bailout commitment can entail high costs for the potential guarantor.
We investigate the political determinants of risk premiums which sub-national governments in Switzerland have to pay for their sovereign bond emissions. For this purpose we make use of financial market data from 288 tradable cantonal bonds in the period from 1981 to 2007. Our main focus is on two different political influences. First, many of the Swiss cantons have adopted very strong fiscal rules. We find evidence that both the presence and the strength of these fiscal rules contribute significantly to lower cantonal bond spreads. Second, we study the impact of a credible no-bailout regime on the risk premia of potential guarantors. We make use of the Leukerbad court decision in July 2003 which relieved the cantons from backing municipalities in financial distress, thus leading to a fully credible no-bailout regime. Our results show that this break lead to a reduction of cantonal risk premia by about 25 basis points. Moreover, it cut the link between cantonal risk premia and the financial situation of the municipalities in its canton which existed before. This demonstrates that a not fully credible no-bailout commitment can entail high costs for the potential guarantor.
