Government accountability and fiscal discipline: A panel analysis using Swiss data

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jpubeco.2006.07.003 Byline: Christoph A. Schaltegger (a)(b)(d), Benno Torgler (c)(d) Keywords: Government accountability; Fiscal performance; Indebtedness; Social capital Abstract: Government accountability through electoral engagement, involvement and participation in the political debate can affect government performance. Using data for the full sample of Swiss cantons over the 1981-2001 period, this paper provides empirical evidence that government accountability is crucial for fiscal discipline. Specifically, in cantons with high levels of government accountability, the level of indebtedness is significantly lower, indicating that accountability supports fiscal discipline. To obtain a useful approximation for government accountability between citizens and their representatives, we use information from direct voter participation in political decisions (initiatives and public referenda) in Swiss state (cantonal) governments. Electoral support of government proposals reveals an important aspect of accountability in a real world setting. Author Affiliation: (a) Swiss Federal Department of Finance, Bundesgasse 3, CH-3003 Berne, Switzerland (b) University of St. Gallen, Switzerland (c) The Whitney and Betty MacMillan Center for International and Area Studies at Yale, Leitner Program in International and Comparative Political Economy, 34 Hillhouse Avenue, P.O. Box 208206, New Haven, CT 06520, United States (d) CREMA, Center for Research in Economics, Management and the Arts, Switzerland Article History: Received 11 July 2005; Revised 10 July 2006; Accepted 12 July 2006