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Overlapping Political Budget Cycles

We advance the literature on political budget cycles by testing for cycles in expenditures for elections to the legislative and the executive branches. Using municipal data, we identify cycles independently for the two branches, evaluate the effects of overlaps, and account for general year effects. We find sizable effects on expenditures before legislative elections and even larger effects before ...

In: Public Choice 177 82018), 1-2, S. 1-27 | Dirk Foremny, Ronny Freier, Marc-Daniel Moessinger, Mustafa Yeter
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Voters Prefer More Qualified Mayors, but Does It Matter for Public Finances? Evidence for Germany

This paper studies the importance of politicians’ qualification, in terms of education and experience, for fiscal outcomes. The analysis is based on a large panel for 2031 German municipalities for which we have collected information on municipal budgets as well as the election results and qualification levels of mayoral candidates. We principally use a regression discontinuity design focusing on close ...

In: International Tax and Public Finance 23 (2016), 5, S. 875-910 | Ronny Freier, Sebastian Thomasius
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Voting for Direct Democratic Participation: Evidence from an Initiative Election

We study a constitutional change in the German State of Bavaria where citizens, not politicians, granted themselves more say in politics at the local level through a state initiative election in 1995. This institutional setting allows us to observe revealed preferences for direct democracy and to identify factors which explain these preferences. Empirical evidence suggests that support for direct democracy ...

In: International Tax and Public Finance 23 (2016), 4, S. 716-740 | Felix Arnold, Ronny Freier, Magdalena Pallauf, David Stadelmann
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Religious Heterogeneity and Fiscal Policy: Evidence from German Reunification

Theoretical work based on social identity theory predicts that population diversity undermines redistributive public policies. This article tests this proposition exploiting an exogenous shock in diversity due to Germany’s reunification. In contrast to previous work on ethno-linguistic or racial heterogeneity, we specifically analyze religious diversity, which is an increasingly relevant social cleavage ...

In: Journal of Urban Economics 94 (2016), S. 1-12 | Ronny Freier, Benny Geys, Joshua Holm
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Only Conservatives Are Voting in the Rain: Evidence from German Local and State Elections

In this note, we use data from different elections in the German state of North-Rhine Westphalia between 1975 and 2010 to show that the Conservatives profit from lower voter turnout at the expense of the Social Democrats. We deal with the endogeneity of voter turnout by using election day rain as an instrumental variable. Our particular contribution is the comparison of municipal and state electio ...

In: Electoral Studies 41 (2016), S. 213-224 | Felix Arnold, Ronny Freier
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Signature Requirements and Citizen Initiatives: Quasi-experimental Evidence from Germany

Signature requirements are often used as hurdles to prevent overuse of direct democratic instruments such as citizen initiatives. We evaluate the causal effect of lowering signature requirements on the number of observed citizen initiative petitions. Based on municipal-level data for Germany, we make use of changes in signature requirements that occur at specific population thresholds to build an identification ...

In: Public Choice 162 (2015), 1-2, S. 43-56 | Felix Arnold, Ronny Freier
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The Mayor's Advantage: Causal Evidence on Incumbency Effects in German Mayoral Elections

In: European Journal of Political Economy 40 (2015), Part A, S. 16-30 | Ronny Freier
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Do Parties Matter? Estimating the Effect of Political Power in Multi-Party Systems

When there are more than two parties, policy outcomes are typically the result of a bargaining process. We investigate whether changes in political power for various parties have an effect on tax policies. We use an instrumental variable approach where close elections provide the exogenous variation in our variable of interest: voting power. In order to isolate close elections in a proportional election ...

In: European Economic Review 80 (2015), S. 310-328 | Ronny Freier, Christian Odendahl
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The Earnings Return to Graduating with Honors: Evidence from Law Graduates

This paper aims at studying the causal effects of graduating from a university with an honors degree on subsequent earnings. While a rich body of literature has focused on estimating returns to human capital, few studies have analyzed returns at the very top of the education distribution. We highlight the importance of honors degrees for future labor market success in the context of German law graduates. ...

In: Labour Economics 34 (2015), S. 39-50 | Ronny Freier, Mathias Schumann, Thomas Siedler
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Race to the Debt Trap? Spatial Econometric Evidence on Debt in German Municipalities

Through an intertemporal budget constraint, jurisdictions may gain advantages in tax and spending competition by ‘competing’ on debt. While the existing spatial econometric literature focuses on tax and spending competition, very little is known about spatial interaction via public debt. If jurisdictions compete for mobile capital to finance public spending, they may compete in debt levels as well ...

In: Regional Science & Urban Economics 53 (2015) 20-37 | Rainald Borck, Frank M. Fossen, Ronny Freier, Thorsten Martin
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