Current research projects of the Chair of Public Finance

The private benefits of public office(Mark Schelker with Simon Lüchinger and Lukas Schmid, University of Lucerne)

Regular, free, and competitive elections are a key component of democracy. They alter elected politicians’ tradeoff between producing public goods and acquiring private rents. We have a limited understanding to which extent a political mandate helps extract private rents in long-standing democracies with strong institutions, such as Switzerland, and whether political competition may alleviate these concerns. Therefore, it is important to know if simultaneous mandates in business and politics are the result of personal qualities or rent-seeking motives. In our project, we aim to shed light on this issue by answering the following question: Does election to the Swiss National Council causally increase the number of directorship positions a person holds? From a methodological point of view, answering this question is challenging because politicians and other persons may differ along many observable and unobservable dimensions. To circumvent this issue, we compare two arguably similar groups of persons. In the first group are candidates who were barely elected, in the second are candidates who barely lost the electoral race. These two groups are comparable in terms of their previous business network and other characteristics and thus allow us to answer the research question whether a seat in parliament increases the number of board of director positions. Our research projects builds on a novel dataset that comprises detailed individual information 1) on candidates to the federal parliament and 2) on directorship positions in Switzerland in the period of 1970-2015. We are still in the process of the data collection and data cleaning. The data effort requires the close collaboration across research fields with software specialists and database experts. We closely collaborate with sugarcube, a spin-off of the informatics department of the University of Fribourg.

Public finances and fiscal windfalls: Quasi-experimental evidence on the role of institutions under fiscal shocks (Simon Berset with Mark Schelker and Martin Huber)

This research project studies the impact of large exogenous variations in fiscal revenues on local public finances. Our research aims at revealing the determinants of sub-optimal allocation of local public resources. Based on two quasi-experiments in the canton of Zurich, we investigate the impact of a fiscal windfall on municipal budgetary decisions. We are in the midst of the data analysis applying new machine learning methods. Besides improving the understanding of the determinants of public budget allocation at the local level, this study contributes both to the discussion on the impact of local institutions and the flypaper effect.

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