View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics Political Stability and Fiscal Policy Time Series Evidence for the Swiss Federal Level since 1849 LARS P. FELD CHRISTOPH A. SCHALTEGGER CESIFO WORKING PAPER NO. 2691 CATEGORY 1: PUBLIC FINANCE JUNE 2009 An electronic version of the paper may be downloaded • from the SSRN website: www.SSRN.com • from the RePEc website: www.RePEc.org • from the CESifo website: www.CESifo-group.org/wpT T CESifo Working Paper No. 2691 Political Stability and Fiscal Policy Time Series Evidence for the Swiss Federal Level since 1849 Abstract This paper explores the role of political stability on fiscal policy choices in a time-series ana- lysis over 158 years on the Swiss federal level. We argue that the fiscal-commons problem of public finances is affected by the time-horizon of a finance minister. Arguably, the incentives for an incumbent to maintain a good reputation with sound policy decisions are stronger the longer the time-horizon of a respective term. In addition, a finance minister who succeeds to stay a long time in office normally enjoys a politically powerful position towards the parlia- ment, the administration and the interest groups to influence policy decisions. In contrast, fre- quent government turnover weakens the position of the finance minister. JEL Code: H11, H50, H61, D78. Keywords: political stability, fiscal policy, constitutional changes. Lars P. Feld Christoph A. Schaltegger University of Heidelberg economiesuisse Alfred-Weber-Institute Hegibachstrasse 47 Bergheimerstrasse 58 8032 Zürich 69115 Heidelberg Switzerland Germany
[email protected] [email protected] We would like to thank Urs Altermatt, Thushyanthan Baskaran, Charles B.