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Vetoing and inaugurating policy like others do: evidence on spatial interactions in voter initiatives

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A sizeable literature studies strategic interactions between governments. In this paper, we ask whether, in the presence of direct democratic institutions, voters’ actions in vetoing a decision or inaugurating a policy by a binding initiative in their jurisdiction have spillover effects on the actions of voters in neighboring jurisdictions. We collect (and make available) data on 3300 initiatives in German towns from 2002 to 2014 and match these to panel data on the towns’ sociodemographic and fiscal characteristics. We apply an instrumental variables approach and find that a jurisdiction’s probability of hosting an initiative is positively driven by the neighbors’ direct democratic activity. The size of the estimated average effect peaks around a 20 km neighborhood—where a standard deviation change of neighbors’ activity increases the probability of hosting an initiative by 5 percentage points—then gradually declines and fades away after around 60 km. This effect is driven by spillovers in similar policy areas and by successful initiatives, and is stronger in towns with relatively more information flows (measured by newspaper consumption and commuter flows).
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Vetoing and inaugurating policy like others do: evidence
on spatial interactions in voter initiatives
Zareh Asatryan
1
Annika Havlik
1,2
Frank Streif
1,2
Received: 16 September 2016 / Accepted: 26 May 2017 / Published online: 21 June 2017
Springer Science+Business Media, LLC 2017
Abstract A sizeable literature studies strategic interactions between governments. In this
paper, we ask whether, in the presence of direct democratic institutions, voters’ actions in
vetoing a decision or inaugurating a policy by a binding initiative in their jurisdiction have
spillover effects on the actions of voters in neighboring jurisdictions. We collect (and make
available) data on 3300 initiatives in German towns from 2002 to 2014 and match these to
panel data on the towns’ sociodemographic and fiscal characteristics. We apply an instru-
mental variables approach and find that a jurisdiction’s probability of hosting an initiative is
positively driven by the neighbors’ direct democratic activity. The size of the estimated
average effect peaks around a 20 km neighborhood—where a standard deviation change of
neighbors’ activity increases the probability of hosting an initiative by 5 percentage points—
then gradually declines and fades away after around 60 km. This effect is driven by spillovers
in similar policy areas and by successful initiatives, and is stronger in towns with relatively
more information flows (measured by newspaper consumption and commuter flows).
Keywords Direct democracy Spatial spillovers Policy diffusion
JEL Classification D72 D78 R50
1 Introduction
A sizeable literature in economics and political science studies the question of how
strategic interactions among political jurisdictions affect their choice of public policies.
Such interactions may occur horizontally or vertically and between or within countries, in
&Annika Havlik
annika.havlik@gess.uni-mannheim.de
1
Department for Corporate Taxation and Public Finance, ZEW Mannheim, L7 1, 68161 Mannheim,
Germany
2
University of Mannheim, Mannheim, Germany
123
Public Choice (2017) 172:525–544
DOI 10.1007/s11127-017-0460-x
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
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