This paper exploits the introduction of the right of referenda at the local level in the German state of Bavaria in 1995 to study the fiscal effects of direct democracy. In the first part of the paper, we establish the relationship between referenda activity and fiscal performance by using a new...

This paper studies with disaggregated budget data how expenditures, revenues, and borrowing evolve in municipalities that receive bailouts. It asks whether higher-level governments enforce austerity measures after bailing out indebted municipalities. The sample consists of 421 municipalities in...

We study how a fragmented political landscape affects fiscal policy and economic growth with a sample of 15 Indian States over the period 1980-2000. We measure state-level political fragmentation with an inverse Herfindahl index for party vote shares in the state legislature. Our results show...