TY - JOUR

T1 - Government spending and legislative organization

T2 - Quasi-experimental evidence from Germany

AU - Egger, Peter

AU - Köthenbürger, Marko

N1 - JEL classification: D72, H72, R51

PY - 2010

Y1 - 2010

N2 - This paper presents empirical evidence of a positive effect of council size on government spending using a dataset 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 relate population size of a municipality in order 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.

AB - This paper presents empirical evidence of a positive effect of council size on government spending using a dataset 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 relate population size of a municipality in order 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.

KW - Faculty of Social Sciences

U2 - 10.1257/app.2.4.200

DO - 10.1257/app.2.4.200

M3 - Journal article

VL - 2

SP - 200

EP - 212

JO - American Economic Journal: Applied Economics

JF - American Economic Journal: Applied Economics

SN - 1945-7782

IS - 4

ER -