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Are Direct Democracies more Responsive to Voter Preferences?

This paper tests whether the fiscal policy response to a large change in voter preferences depends on institutional rules governing the budgetary process. Theory suggests that policies in more direct democratic regimes are "closer" to that of the median voter. We provide direct evidence on how voter preferences shifted when women suffrage was introduced in Switzerland using federal referendums. In a second step, we link the preference parameters to data on fiscal policy outcomes and canton characteristics. Controlling for voter preferences, the effect of direct democracy on log expenditures and revenues declines by 5 to 45 percent. We do however not find evidence that cantons with more direct democracy are in general more responsive to shifts in voter preferences.