OECD Economics Department Working Papers

Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

English, French

Enhancing the Effectiveness of Public Spending in Switzerland

Switzerland is a highly decentralised country with large spending and revenue-raising powers devolved to cantons and municipalities. The federal system, in combination with an extensive use of direct democracy, has contributed to keep public spending at a relatively low level in international comparison. It has also made it possible to tailor the provision of public services to citizens’ needs and willingness to pay and to experiment with a variety of policies. At the same time, several tensions have emerged and effective control of spending deteriorated during the 1990s. After identifying these tensions, this paper reviews recent policy initiatives and proposes options for further enhancing public spending effectiveness. These entail implementing a new fiscal rule which will allow the free play of the automatic stabilisers at the federal level and ensuring its consistency with other government levels’ behaviour; increasing transparency in public spending costs and ...


Keywords: fiscal federalism, new public management, Switzerland, intergovernmental grants, fiscal equalisation, fiscal rules, public spending
JEL: H1: Public Economics / Structure and Scope of Government; H7: Public Economics / State and Local Government; Intergovernmental Relations; H4: Public Economics / Publicly Provided Goods; E61: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Policy Objectives; Policy Designs and Consistency; Policy Coordination; H6: Public Economics / National Budget, Deficit, and Debt; H5: Public Economics / National Government Expenditures and Related Policies; H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies; E62: Macroeconomics and Monetary Economics / Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook / Fiscal Policy
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