This paper addresses the question of the optimal debt level of a state (canton) that issues new bonds and subsequently invests the borrowed capital. For that purpose, we first estimate the effect of ...the debt level on the interest rate and then we contrast the predicted interest rate with potential revenue from the capital markets. The estimation is based on panel data from the 26 Swiss cantons between 1980 and 2015. The median performance of Swiss pension funds serves as a reference value for the revenue achieved in the capital market. The results show an exponential relationship between the debt and its interest rate; raising indebtedness by 1000 Swiss francs per capita makes the spread between the risk-free rate and the interest rate on the debt increase by 5%. Given this small effect, the inherent optimal debt level equals more than twice the initial levels and the reinvested uncommitted funds provide a return potential of nearly 5% of the total cantonal receipts, on average.
It is common practice to assign revenue to accomplish specific governmental tasks in general and to provide transport infrastructure in particular. However, neither the literature in public ...administration nor in public choice has reached a consensus about the effects that earmarking has on efficiency. Building on earlier public choice models, we argue that this mechanism prevents budget debates from occurring and reduces the incentives for ministers to monitor the colleagues whose budgets are financed by earmarked revenues. These latter tend to overuse public resources, thus increasing inefficiency. A stochastic frontier model fed with data from Swiss cantonal ministries of transport from 2000 to 2016 tests this hypothesis. The results reveal a negative effect of earmarking on efficiency. For every 1,000 additional Swiss francs per capita financed out of an earmarked fund, the input requirement increases by 5.4 percent on average.
This study is an empirical analysis of the impact of direct tax revenue budgeting errors on fiscal deficits. Using panel data from 26 Swiss cantons between 1980 and 2002, we estimate a single ...equation model on the fiscal balance, as well as a simultaneous equation model on revenue and expenditure. We use new data on budgeted and actual tax revenue to show that underestimating tax revenue significantly reduces fiscal deficits. Furthermore, we show that this effect is channeled through decreased expenditure. The effects of over and underestimation turn out to be symmetric.
When considering the environmental damage caused by road traffic, one traditionally focuses attention on the consequences of accidents, or on the impact of air and noise pollution. This somewhat ...narrow definition should be enlarged to capture other, more psychological nuisances. The barrier effect created by heavily travelled streets belongs to this group of nuisances, rarely described and never estimated in monetary terms. It particularly affects children, the disabled and elderly people for whom the street becomes too large to cross. In a survey carried out at Neuchâtel, Switzerland, a contingent market was proposed to suppress the barrier effect around the city centre. A valuation function to predict the bids is estimated and used to infer the annual cost of the nuisance. Copyright Kluwer Academic Publishers 1995
The accurate description of the contingent market is a necessary condition for eliciting willingness-to-pay values. So far, however, the contingent market for a reduction in the risk of being the ...victim of a road accident has only been broadly specified. This Swiss experiment attempts to define the good to be purchased by respondents with greater precision. It concentrates on the human costs of road accidents, i.e., pain, suffering, and bereavement. Respondents were asked to consider themselves either as potential victims of a road accident or as relatives of potential victims and to state their willingness to pay to reduce the likelihood of such an accident occurring.
This paper explores the impact of citizens’ motivation to vote on the pattern of fiscal federalism. If the only concern of instrumental citizens was outcome they would have little incentive to vote ...because the probability that a single vote might change an electoral outcome is usually minuscule. If voters turn out in large numbers to derive intrinsic value from action, how will these voters choose when considering the role local jurisdictions should play? The first section of the paper assesses the weight that expressive voters attach to an instrumental evaluation of alternative outcomes. Predictions are tested with reference to case study analysis of the way Swiss voters assessed the role their local jurisdiction should play. The relevance of this analysis is also assessed with reference to the choice that voters express when considering other local issues. Textbook analysis of fiscal federalism is premised on the assumption that voters register choice just as ‘consumers’ reveal demand for services in a market, but how robust is this analogy?
Empirical literature on the analysis of the efficiency of measures for reducing persistent government deficits has mainly focused on the direct explanation of deficit. By contrast, this paper aims at ...modeling government revenue and expenditure within a simultaneous framework and deriving the fiscal balance (surplus or deficit) equation as the difference between the two variables. This setting enables one to not only judge how relevant the explanatory variables are in explaining the fiscal balance but also understand their impact on revenue and/or expenditure. Our empirical results, obtained by using a panel data set on Swiss Cantons for the period 1980–2002, confirm the relevance of the approach followed here, by providing unambiguous evidence of a simultaneous relationship between revenue and expenditure. They also reveal strong dynamic components in revenue, expenditure, and fiscal balance. Among the significant determinants of public fiscal balance we not only find the usual business cycle elements, but also and more importantly institutional factors such as the number of administrative units, and the ease with which people can resort to political (direct democracy) instruments, such as public initiatives and referendum.
Landscape is an example of a non-market good where no metrics exist to measure its quality. The paper proposes an original methodology to nevertheless estimate scope variables in those circumstances, ...allowing then to better test if people's willingness-to-pay for such good is sensitive to the scope. The methodology is based on techniques developed in the context of multicriteria decision analysis. It is applied to assess the quality of the landscape of several Swiss alpine resorts. This assessment is then used as an explanatory variable in a hedonic price function to explain the rent of apartments and to derive an implicit price of the landscape quality. La paysage est l'exemple d'un bien non marchand pour lequel il n'existe pas de métrique permettant d'en mesurer la qualité. Cette contribution propose une méthodologie novatrice pour, malgré tout, estimer des variables d'envergure dans de telles circonstances, afin de mieux tester si la disposition à payer des individus est sensible à l'envergure. La méthodologie se fonde sur des techniques développées en analyse multicritère de la décision. Elle est appliquée pour évaluer la qualité du paysage de plusieurs stations alpines suisses. Les résultats sont ensuite utilisés comme variable explicative du loyer des appartements dans une fonction de prix hédonistes afin de déterminer le prix implicite de la qualité du paysage.
Market segmentation is an important issue when estimating the implicit price for an environmental amenity from a surrogate market like property. This paper tests the hypothesis of a segmentation of ...the housing market between tourists and residents and computes the implicit price for natural landscape quality in Swiss alpine resorts. The results show a clear segmentation between both groups of consumers, although tests also show that the estimated coefficient for landscape is similar in the tourists’ model and in the residents’. However, since the functional form is non linear, the nominal – rather than relative - value of a change in natural landscape quality is higher in the tourist housing market than in the residents’. Hence, considering the segmentation of the market between tourists and residents is essential in order to provide valid estimates of the nominal implicit price of natural landscape quality.
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