Direct democracy, coalition size and public spending

Abstract

This article contributes to the literature on direct democracy and public spending in two ways. First, we explore how direct democratic institutions interact with a specific aspect of the representative system, the size of the governing coalition, to influence public spending. Second, based on newly collected data, we examine the relationship between three different direct democratic institutions, coalition size and public spending over the period from 1860 to 2015. Empirically, we find that initiatives increase the size of the public sector under single-party governments, but this positive relationship disappears as coalition size increases. In contrast, we find that financial referendums slow down the growth of public spending, while law referendums are not systematically associated with public spending. Finally, we find that the relationship between direct democratic institutions, coalition size and public spending does not change over time despite the long period under investigation.