The indirect effects of direct democracy: local government size and non-budgetary voter initiatives

Recently a wide and empirically-backed consensus has emerged arguing that direct democratic control over government's spending decisions through initiatives and referenda constrains government size. But what happens if budgetary matters are excluded from the voters' right of the initiative? I study this question by extending the analysis to German direct democracy reforms of the mid-1990s, which granted voters wide opportunities to initiate referenda on local issues, but neither the right, nor the responsibility of voting on the implied costs of these initiatives. By exploiting a novel dataset containing detailed information on close to 2,300 voter initiatives in the population of around 13,000 German municipalities from 2002 to 2009, I show that in this sample { and in contrast to the Swiss and US evidence { direct democracy causes an expansion of local government size by up to 8% in annual per capita expenditure and revenue per observed initiative (on economic projects). The main empirical challenge is the endogeneity of voters' unobserved preferences which simultaneously determine both their propensity towards exploiting their direct democracy rights and their preferences for local public policies. To address this issue I use state- and municipality-varying legislative thresholds on the minimum number of signatures required to initiate referenda and the time to collect these signatures as strong and exogenous instruments for observed initiatives

Some Observations on the Economic Implications of Constitutional Reform in Armenia

Armenia is preparing for a major reform of its constitution. The draft of the new constitution proposes a switch to a parliamentary system from the current (semi-) presidential system and to a proportional electoral rule from the existing (semi-) majoritarian system, among other changes. In this short article, I present some stylized facts and summarize the existing knowledge about the economic effects of constitutions. This body of evidence suggests that a switch to a parliamentary system with proportional representation may create political institutions that favor a larger public sector in Armenia with a particular pro-spending bias in social insurance programs. On the political side, descriptive evidence based on conventional democracy scores suggests that parliamentary countries, on average, have more developed democratic institutions. However, a closer look at countries that switched to parliamentary systems in the 1990s and 2000s reveals that governments opt for a constitutional change primarily to utilize more not less political power

Cost Benefit Analysis and Adjustments of Corporate Social Responsibility in the Airline Industry

The decision-making processes in Corporate Social Responsibility (CSR) among firms in general and airlines in particular have to do with the benefits that accrue through those investments. The crux of the matter is not whether to invest in CSR or not, but rather, how firms can quantify the benefits derived from such investments. This paper analyzes the cost benefit adjustment strategies for firms in the airline industry in their CSR strategy adoption and implementation. The adjustment strategies identified will enable firms in the airline industry to have a basis for determining the worth of such CSR investments. This paper discusses the cost and benefit analysis model in order to understand the ways airlines can reduce costs and increase returns on CSR, or balance the cost and benefits. The analysis from this study points to the fact that economic concepts especially the CBA are useful, though they are not without challenges. The challenge arises when it is problematic to express the real impact of the externality in monetary terms. The use of rational maximization of the gains may seem to be a rather optimistic goal mainly because of environmental variability, perceptual uncertainty, and imperfect knowledge about the potential externality. This paper concludes that the CBA model gives a basic understanding of the motivations for investing in intangible assets like CSR. Consequently, it sets the tone for formulating relevant hypothesis in empirical studies in investment in CSR in particular and other intangible assets in business operations

Complete gluon bremsstrahlung corrections to the process b -> s l+ l-

In a recent paper, we presented the calculation of the order (alpha_s) virtual corrections to b->s l+ l- and of those bremsstrahlung terms which are needed to cancel the infrared divergences. In the present paper we work out the remaining order(alpha_s) bremsstrahlung corrections to b->s l+ l- which do not suffer from infrared and collinear singularities. These new contributions turn out to be small numerically. In addition, we also investigate the impact of the definition of the charm quark mass on the numerical results.Comment: 20 pages including 11 postscript figure

Nudging for tax compliance: A meta-analysis

Taxpayer nudges – behavioral interventions that aim to increase tax compliance without changing the underlying economic incentives of taxpayers – are used increasingly by governments because of their potential cost-effectiveness in raising tax revenue. We collect about a thousand treatment effect estimates from over 40 randomized controlled trials, and in a metaanalytical framework show that non-deterrence nudges – interventions pointing to elements of individual tax morale – are on average ineffective in curbing tax evasion, while deterrence nudges – interventions emphasizing traditional determinants of compliance such as audit probabilities and penalty rates – are potent catalysts of compliance. These effects are, however, fairly small in magnitude. Deterrence nudges increase the probability of compliance by only 1.5-2.5 percentage points more than non-deterrence nudges, while the effects are likely to be bound to the short-run, and are somewhat inflated by selective reporting of results