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Previous empirical literature has shown that in order to overcome agency problems voters make interjurisdictional comparisons of fiscal performance when making electoral decisions. Incumbents therefore anticipate voters' feedback by copying fiscal policy decisions from neighbors. This paper argues that fiscal autonomy (exit) as well as direct legislation (voice) enrich political competition, reducing thus the influence of electoral competition on fiscal decisions. Consequently, policy mimicking does not matter in circumstances of direct legislation & fiscal autonomy where the impact of voters on the political agenda is particularly strong. Based on panel data between 1980 & 1998 we find encouraging evidence supporting our theoretical arguments. 4 Tables, 1 Figure, 1 Appendix, 61 References. Adapted from the source document.

Economics is a science that can contribute substantial powerful and fresh insights! This book collects essays by leading academics that evaluate the scholarly importance of contemporary economic ideas and concepts, thus providing valuable knowledge about the present state of economics and its progress. This compilation of short essays helps readers interested in economics to identify 21st century economic ideas that should be read and remembered. The authors state their personal opinion on what matters most in contemporary economics and reveal its fascinating and creative sides.

Zusammenfassung
Die Schweiz ist im internationalen Vergleich ein stark föderalistisch geprägtes Land. Trotzdem ist auch in der Schweiz ein Zentralisierungsschub zum Bund auszumachen. Die Reform des Finanzausgleichs von 2008 hat eine klarere Aufgabenzuteilung gebracht, konnte allerdings die Zentralisierungskräfte nur unzureichend beschränken. Wir argumentieren, dass ein Blick auf den bundesrätlichen Entwurf zur Finanzordnung von 1948 zeigt, dass eine striktere Aufgaben- und Einnahmentrennung zwischen den Staatsebenen durchaus möglich wäre. Entscheidend für die Aufrechterhaltung einer föderalistischen Ordnung sind institutionelle Vorkehren gegen die Zentralisierung. Als institutionelle Vorkehren kommen die Aufwertung des Subsidiaritätsprinzips, ein besonderer Föderalismusvorbehalt, eine detailliertere Regelung des Finanzausgleichs im engeren Sinn auf Verfassungsstufe sowie der Einbau von "Zentralisierungsbremsen" in Frage.

This paper explores the role of political stability on fiscal policy choices in a time-series analysis over 158 years on the Swiss federal level. We argue that the fiscal-commons problem of public finances is affected by the time-horizon of a finance minister. Arguably, the incentives for an incumbent to maintain a good reputation with sound policy decisions are stronger the longer the time-horizon of a respective term. In addition, a finance minister who succeeds to stay a long time in office normally enjoys a politically powerful position towards the parliament, the administration and the interest groups to influence policy decisions. In contrast, frequent government turnover weakens the position of the finance minister.

A common political claim is that decentralized governments undermine policy-makers' ability to resist fiscal imbalance. This paper examines how fiscal centralization influences the likelihood of a successful fiscal adjustment. Using a panel of Swiss cantons from 1981 to 2001, we empirically investigate the determinants of successful long-lasting deficit reductions. Contrary to some results in the literature, we find that fiscal centralization significantly decreases the probability of a successful fiscal consolidation when the contravening effects of competitive and cooperative federalism are disentangled. The results also point to an important role of the economic environment, in particular the size of the primary balance in the years before the consolidation, in determining whether adjustment policy is successful. [Copyright Elsevier B.V.]

The fiscal commons problem is one of the most prominent explanations of excessive spending in political economics. The more fragmented a government, the higher its spending. In this paper we investigate to what extent this problem can be mitigated by different fiscal or constitutional insti-tutions. We distinguish between two variants of fragmented governments: cabinet size and coali-tion size. In addition, we analyze whether constitutional rules for executive and legislature as well as formal fiscal restraints shape the size of government and how different rules interact with fragmentation in determining government size. The empirical analysis of the role of fragmented governments for fiscal policy outcomes is based on a panel of 26 Swiss cantons from 1980-1998. The results indicate that the number of ministers in the cabinet is negatively associated with fiscal discipline. Furthermore, fiscal referendums effectively restrict the size of government, while for-mal fiscal restraints more effectively restrict the fiscal commons problem. (This is a thoroughly revised version of Crema WP Nr. 2004-15)

A common political claim is that decentralized governments undermine policy makers' ability to fight fiscal imbalance. This paper examines how different fiscal institutions influence the likelihood of a successful fiscal adjustment. Using a panel of the Swiss cantons from 1981 to 2001, we first analyze the episodes of tight fiscal policy and their macroeconomic consequences. Then, we empirically investigate the determinants of successful long-lasting deficit reductions. Contrary to the popular claim, we find that fiscal decentralization increases the probability of a successful fiscal consolidation. In addition, the results point to an important role of intergovernmental grants and the circumstances, in particular the size of fiscal imbalance in the years before the consolidation in determining a successful adjustment policy. Furthermore, coalition governments and large parliaments less likely implement successful fiscal stabilizations. Finally, there is some weak evidence that spending cuts are more promising in reaching a long-lasting fiscal adjustment than revenue increases.

A common political claim is that decentralized governments undermine policy makers' ability to fight fiscal imbalance. This paper examines how different fiscal institutions influence the likeli-hood of a successful fiscal adjustment. Using a panel of the Swiss cantons from 1981 to 2001, we first analyze the episodes of tight fiscal policy and their macroeconomic consequences. Then, we empirically investigate the determinants of successful long-la¬sting deficit reductions. Contrary to the popular claim, we find that fiscal decentralization increases the probability of a successful fiscal consolidation. In addition, the results point to an important role of intergovernmental grants and the circumstances, in particular the size of fiscal imbalance in the years before the consolida-tion in determining a successful adjustment policy. Furthermore, coalition governments and large parliaments less likely implement successful fiscal stabilizations. Finally, there is some weak evidence that spending cuts are more promising in reaching a long-lasting fiscal adjustment than revenue increases.