The Role of Direct Democracy in the European Union

In this paper, the introduction of direct-democratic decision-making in all EU decisions is considered when it is feasible without prohibitively increasing decision-making costs. We start with the contractarian argument that each constitution is a contract joining the citizens of a state and requires as such the explicit agreement of (a majority of) citizens. Thus, the future European Constitution as well as future changes of it should be decided by the European citizens. After a discussion of the pros and cons of direct democracy, the ability of direct democracy to help creating a European demos is discussed. Consequently, we propose a mandatory (required and binding) referendum on total and partial revisions of the European Constitution. In addition, we propose a constitutional initiative, a statutory and a general initiative as well as a fiscal referendum for financially important projects.Direct Democracy, Referenda, Initiatives.

Sustainable Fiscal Policy in a Federal System: Switzerland as an Example

How a sustainable fiscal policy can be performed in a federal system is not only a Swiss problem but is also discussed in other federal countries like Germany and Austria, and in the European Union. Contrary to most other countries, the Swiss fiscal system is characterised by an extensive fiscal federalism with high fiscal autonomy at all governmental levels, by direct popular rights which include fiscal referenda at the cantonal and local levels, and by particular constitutional and/or statutory fiscal restraints in order to prevent excessive public debt. In this paper, the effects of these constitutional clauses on public finances are investigated. Using a panel of the 26 Swiss cantons from 1980 to 1998, we provide evidence that direct democracy leads to significantly lower expenditure and revenue. The fiscal constraint, on the other hand, significantly reduces budget deficits. Total, cantonal as well as local expenditure and revenue are the lower the higher the share of local expenditureDirect Democracy, Referenda, Initiatives.

The Role of Direct Democracy in the European Union

In this paper, the introduction of direct-democratic decision-making in all EU decisions is considered when it is feasible without prohibitively increasing decision-making costs. We start with the contractarian argument that each constitution is a contract joining the citizens of a state and requires as such the explicit agreement of (a majority of) citizens. Thus, the future European Constitution as well as future changes of it should be decided by the European citizens. After a discussion of the pros and cons of direct democracy, the ability of direct democracy to help creating a European demos is discussed. Consequently, we propose a mandatory (required and binding) referendum on total and partial revisions of the European Constitution. In addition, we propose a constitutional initiative, a statutory and a general initiative as well as a fiscal referendum for financially important projects.democracy, referenda, initiatives

The Impact of Corporate and Personal Income Taxes on the Location of Firms and on Employment: Some Panel Evidence for the Swiss Cantons

The impact of corporate income taxes on location decisions of firms is widely debated in the tax competition literature. Tax rate differences across jurisdictions may lead to distortions of firms’ investment decisions. Empirical evidence on tax induced relocation and subsequent economic development in the U.S. and Europe is still inconclusive. Much the same applies to Switzerland. While there is some evidence on personal income tax competition between Swiss cantons, evidence on the impact of intercantonal corporate income tax differences on the location of business within Switzerland is missing. In this paper, we present econometric evidence on the influence of corporate and personal income taxes on the regional distribution of firms in 1981 and 1991 and on cantonal employment using a panel data set of the 26 Swiss cantons from 1985 to 1997. The results show that corporate and personal income taxes deter firms to locate in a canton and subsequently reduce cantonal employment.Corporate income taxes, personal income taxes, tax competition, business location

Perturbation theory for optical excitations in the one-dimensional extended Peierls--Hubbard model

For the one-dimensional, extended Peierls--Hubbard model we calculate analytically the ground-state energy and the single-particle gap to second order in the Coulomb interaction for a given lattice dimerization. The comparison with numerically exact data from the Density-Matrix Renormalization Group shows that the ground-state energy is quantitatively reliable for Coulomb parameters as large as the band width. The single-particle gap can almost triple from its bare Peierls value before substantial deviations appear. For the calculation of the dominant optical excitations, we follow two approaches. In Wannier theory, we perturb the Wannier exciton states to second order. In two-step perturbation theory, similar in spirit to the GW-BSE approach, we form excitons from dressed electron-hole excitations. We find the Wannier approach to be superior to the two-step perturbation theory. For singlet excitons, Wannier theory is applicable up to Coulomb parameters as large as half band width. For triplet excitons, second-order perturbation theory quickly fails completely.Comment: 32 pages, 12 figures, submtted to JSTA

Cluster approach study of intersite electron correlations in pyrochlore and checkerboard lattices

To treat effects of electron correlations in geometrically frustrated pyrochlore and checkerboard lattices, an extended single-orbital Hubbard model with nearest neighbor hopping $\sim t$ and Coulomb repulsion $\sim V$ is applied. Infinite on-site repulsion, $U\to\infty$, is assumed, thus double occupancies of sites are forbidden completely in the present study. A variational Gutzwiller type approach is extended to examine correlations due to short-range $V-$interaction and a cluster approximation is developed to evaluate a variational ground state energy of the system. Obtained analytically in a special case of quarter band filling appropriate to LiV$_2$O$_4$, the resulting simple expression describes the ground state energy in the regime of intermediate and strong coupling $V$. Like in the Brinkman-Rice theory based on the standard Gutzwiller approach to the Hubbard model, the mean value of the kinetic energy is shown to be reduced strongly as the coupling $V$ approaches a critical value $V_{c}$. This finding may contribute to explaining the observed heavy fermion behavior in LiV$_2$O$_4$

The Effect of Direct Democratic Institutions on Income Redistribution: Evidence for Switzerland

There is an intensive dispute in political economics about the impact of institutions on income redistribution. While the main focus is on comparison between different forms of representative democracy, the influence of direct democracy on redistribution has attracted much less attention. In this paper, employing both a composite index and measures of single institutions, we find that direct democracy is particularly associated with lower welfare spending. Moreover, we estimate a model which explains the determinants of achieved redistribution measured by Gini coefficients using panel data provided by the Swiss Federal Tax Office from 1981 to 1997. While our results indicate that less public funds are used to redistribute income and actual redistribution is lower, inequality is not reduced to a lesser extent in direct than in representative democracies for a given initial income distribution.Income Redistribution; Direct Democracy; Referendums; Initiatives

Decentralized Taxation and the Size of Government: Evidence from Swiss State and Local Governments

According to the Leviathan-Model, fiscal federalism is seen as a binding constraint on a revenue-maximizing government. The competitive pressure of fiscal federalism is supposed to reduce public sector size as compared to unitary states. However, empirical results concerning the Leviathan hypothesis are mixed. This study uses a state and local-level panel data set of Swiss cantons from 1980 to 1998 to empirically analyze the effect of different federalist institutions on the size and structure of government revenue. Because of the considerable tax autonomy of sub-national Swiss governments, it is possible to investigate different mechanisms by which fiscal federalism may influence government size. The results indicate that tax exporting has a revenue expanding effect whereas tax competition favors a smaller size of government. Fragmentation has essentially no effect on the size of government revenue for Swiss cantons. The overall effect of revenue decentralization leads to fewer tax revenue but higher user charges. Thus, revenue decentralization favors a smaller size of government revenue and shifts government revenue from taxes to user charges.federalism, government revenue, tax competition, tax exporting

The Effect of Direct Democracy on Income Redistribution: Evidence for Switzerland

There is an intensive dispute in political economics about the impact of institutions on income redistribution. While the main focus is on comparison between different forms of representative democracy, the influence of direct democracy on redistribution has attracted much less attention. According to theoretical arguments and previous empirical results, government policies of income redistribution are expected to be more in line with median voter preferences in direct than in representative democracies. In this paper, we find that institutions of direct democracy are associated with lower public spending and revenue, particularly lower welfare spending and broad-based income and property (wealth) tax revenue. Moreover, we estimate a model which explains the determinants of redistribution using panel data provided by the Swiss Federal Tax Office from 1981 to 1997 and a cross section of (representative) individual data from 1992. While our results indicate that less public funds are used to redistribute income and actual redistribution is lower, inequality is not reduced to a lesser extent in direct than in representative democracies for a given initial income distribution. This finding might well indicate the presence of efficiency gains in redistribution policies.income redistribution, direct democracy, referenda, initiatives

Comparison of Variational Approaches for the Exactly Solvable 1/r-Hubbard Chain

We study Hartree-Fock, Gutzwiller, Baeriswyl, and combined Gutzwiller-Baeriswyl wave functions for the exactly solvable one-dimensional $1/r$-Hubbard model. We find that none of these variational wave functions is able to correctly reproduce the physics of the metal-to-insulator transition which occurs in the model for half-filled bands when the interaction strength equals the bandwidth. The many-particle problem to calculate the variational ground state energy for the Baeriswyl and combined Gutzwiller-Baeriswyl wave function is exactly solved for the~$1/r$-Hubbard model. The latter wave function becomes exact both for small and large interaction strength, but it incorrectly predicts the metal-to-insulator transition to happen at infinitely strong interactions. We conclude that neither Hartree-Fock nor Jastrow-type wave functions yield reliable predictions on zero temperature phase transitions in low-dimensional, i.e., charge-spin separated systems.Comment: 23 pages + 3 figures available on request; LaTeX under REVTeX 3.