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Public Choice

, Volume 130, Issue 1–2, pp 79–98 | Cite as

Independent and competing agencies: An effective way to control government

  • Reiner Eichenberger
  • Mark Schelker
Original Article

Abstract

Controlling government is a primary focus of the politico-economic literature. Recently, various political institutions have been analyzed from this perspective, most importantly balanced budget rules, fiscal federalism, and direct democracy. However, one type of institution has been neglected so far: elected competitors to the government. Such institutional competition between the government and an independent agency can be found at the Swiss local level, where finance Commissions compete with the government. In some parts of Switzerland, local finance commissions can ex ante criticize government projects and bring alternative policy proposals onto the political agenda, which are then voted on by the citizens. Thus, they become strong competitors to the government. We econometrically investigate this institutional setting by comparing the 26 Swiss cantons. We find the power of the local finance commission to have an economically relevant, statistically significant and robust negative effect on the tax burden and on public expenditures.

Keywords

Political economics Political control institution Institutional competition Audit court 

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Copyright information

© Springer Science + Business Media B.V. 2006

Authors and Affiliations

  1. 1.Center for Public FinanceUniversity of FribourgFribourgSwitzerland

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