Government Form and Public Spending: Theory and Evidence from U.S. Municipalities
There are two main forms of government in U.S. cities: council-manager and mayor-council. This paper develops a theory of fiscal policy determination under these two forms. The theory predicts that expected public spending will be lower under mayor-council, but that either form of government could be favored by a majority of citizens. The latter prediction means that the theory is consistent with the co-existence of both government forms. Support for the former prediction is found in both a cross-sectional analysis and a panel analysis of changes in government form.
We are particularly indebted to Ruben Enikolopov, Lynn MacDonald, Torsten Persson, Stephen Ross and Razvan Vlaicu for very helpful comments. We also thank Tracy Gordon, Peter Marino, Marion Orr, Martin Shefter, Steven Tadelis, Francesco Trebbi, and seminar participants at Berkeley, Columbia and Maryland for useful discussions and comments. Financial support from the National Science Foundation (Grant SES-0452561) is gratefully acknowledged. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Stephen Coate & Brian Knight, 2011. "Government Form and Public Spending: Theory and Evidence from US Municipalities," American Economic Journal: Economic Policy, American Economic Association, vol. 3(3), pages 82-112, August. citation courtesy of