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Colleen Donovan
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| Ph.D. Candidate Department of Economics University of California, Berkeley Contact informationDepartment of Economics, UC Berkeley Curriculum vitae |
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Fields of interestPrimary: Political Economics, Public FinanceSecondary: Labor Economics, Public Policy, Applied Econometrics ResearchDirect democracy, term limits, and municipal fiscal decisions in the United States (Job Market Paper)Download Abstract: This
paper provides a direct test of whether the availability of the local
voter initiative and recall processes and term limits influences
municipal fiscal decisions in the United States. Using an adaptation of
Campbell-Mankiw’s (1990) model of forward-looking decision
making, I find that the threats of voter initiative and recall do not
significantly influence local fiscal policies. This suggests that voter
preferences and local fiscal policy are aligned in the absence of these
institutions. Term limits lead to increased short-sighted decision
making, by removing officials’ accountability to voters. This effect
is roughly equivalent to removing almost all access to municipal
borrowing. The analysis improves upon previous studies of US municipal
fiscal policy by utilizing a panel of annual observations of government
fiscal choices between 1970 and 2004 for more than 500 local
jurisdictions . In doing so, the research design identifies the extent
to which cities act according to a rational tax-smoothing model or are
short-sighted in their fiscal decision making over time. In addition to
term limits, large and diverse populations are associated with
short-sighted fiscal policies.
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