Local public choice

How should rules of decision making be designed and how should institutions look like? This study contributes to the discussion of this overarching question by investigating economic, fiscal, and political effects of institutions at the municipal level based on causal empirical analysis. Thus, it is part of a research program with increasing importance within economics – the empirical analysis of municipalities. This analysis typically facilitates more solid results than country studies, since municipalities operate in a comparable institutional framework and effects of reforms can clearly be identified. The study analyzes several dimensions in detail, amongst others: How does the direct election of the mayor, as opposed to the election by the municipal council affect tax rates and spending? How do voting decisions for the mayoral office and the municipal council interdepend? Does the financial situation of municipality influence the interest rate the municipality pays on its debt?