TY - UNPB

T1 - Government Spending and Legislative Organization

T2 - Quasi-experimental evidence from Germany

AU - Egger, Peter

AU - Köthenbürger, Marko

N1 - JEL classification: D7, H7, C2

PY - 2010

Y1 - 2010

N2 - 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.

AB - 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.

M3 - Working paper

BT - Government Spending and Legislative Organization

PB - Department of Economics, University of Copenhagen

ER -