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Table 1 Regression results

From: How can states benefit from the equity premium puzzle? Debt as revenue source for Swiss cantons

  (1) Fixed effects (2) Baseline (3) Assets and equity (4) Year dummies (5) Two step (6) Endogenous (7) Lags (8) No GE and BS (9) Interest rate (10) No conditions (11) No capacity (12) No stability
Lagged dependent variable 0.761*** 0.877*** 0.769*** 0.592*** 0.791*** 0.646*** 0.826*** 0.854*** 0.750*** 0.894*** 0.816*** 0.828***
(0.057) (0.119) (0.128) (0.093) (0.179) (0.116) (0.107) (0.129) (0.074) (0.125) (0.130) (0.132)
Debt (1000 CHF per capita) 0.004 0.048** 0.055** 0.039** 0.126** 0.034* 0.037** 0.087** 6.867** 0.051** 0.033* 0.030*
(0.007) (0.019) (0.023) (0.018) (0.053) (0.020) (0.017) (0.039) (2.992) (0.019) (0.017) (0.015)
Cantonal overall fiscal balance (1000 CHF per capita) 0.043 0.060 0.021 0.031 0.158 0.093 0.058 0.087** − 0.775 0.066 0.059  
(0.035) (0.039) (0.044) (0.040) (0.101) (0.057) (0.038) (0.036) (3.499) (0.039) (0.038)  
Equity (in 1000 CHF per capita)    0.036**          
   (0.014)          
Cantonal non-administrative assets (in 1000 CHF per capita)    − 0.027          
   (0.018)          
Interest receivable (1000 CHF per capita) − 0.110 − 0.187** − 0.190** − 0.123* − 0.462 − 0.211 − 0.179** − 0.214** − 20.094 − 0.193** − 0.150**  
(0.089) (0.077) (0.071) (0.066) (0.624) (0.132) (0.071) (0.079) (13.034) (0.078) (0.066)  
Tax revenue (1000 CHF per capita) − 0.025 − 0.112** − 0.068 − 0.091* − 0.264** − 0.095* − 0.083* − 0.118** − 15.553** − 0.120** − 0.060*  
(0.037) (0.045) (0.040) (0.047) (0.125) (0.052) (0.042) (0.043) (7.527) (0.046) (0.035)  
Municipal fiscal balance (1000 CHF per capita) − 0.040 0.002 0.024 0.301** − 0.645 0.052 0.000 − 0.013 21.012 − 0.012 − 0.008  
(0.075) (0.083) (0.083) (0.109) (0.729) (0.103) (0.081) (0.081) (12.352) (0.079) (0.070)  
No bailout (dummy = 1 after 2003) − 0.105** 0.041 0.014 0.848 0.976* − 0.073 − 0.005 0.040 9.018 0.044 0.007  
(0.041) (0.071) (0.067) (0.763) (0.560) (0.104) (0.063) (0.074) (10.832) (0.083) (0.070)  
Municipal fiscal balance X no bailout 0.169 0.048 − 0.012 −0.197 0.399 − 0.043 0.061 0.012 − 24.251 0.097 0.036  
(0.147) (0.123) (0.126) (0.146) (0.628) (0.154) (0.125) (0.114) (19.478) (0.124) (0.123)  
Cantonal nominal GDP (1000 CHF per capita) 0.004 0.004* 0.002 0.001 0.004* 0.004 0.003 0.004 − 0.003 0.003   − 0.005*
(0.004) (0.002) (0.002) (0.002) (0.002) (0.002) (0.002) (0.003) (0.289) (0.002)   (0.002)
Log (population) − 0.335 − 0.006 0.039* 0.046* 0.151* 0.026 0.003 −0.017 1.740 0.001   0.006
(0.412) (0.018) (0.022) (0.026) (0.088) (0.035) (0.016) (0.023) (3.449) (0.018)   (0.028)
Population growth (in %) 0.008 − 0.011 − 0.005 0.019 − 0.005 0.012 − 0.010 − 0.004 2.000 − 0.014   − 0.004
(0.021) (0.021) (0.024) (0.022) (0.039) (0.034) (0.021) (0.026) (4.701) (0.020)   (0.020)
Elderly (as % of total population) − 0.007 − 0.003 0.009 0.022* 0.030 0.005 −0.002 −0.009 1.270 −0.002   −0.014
(0.015) (0.006) (0.011) (0.013) (0.036) (0.013) (0.006) (0.013) (0.854) (0.006)   (0.014)
Young (as % of total population) − 0.001 − 0.005 0.025 0.003 0.061 − 0.005 − 0.003 − 0.006 − 2.239 − 0.005   − 0.003
(0.017) (0.007) (0.015) (0.015) (0.040) (0.013) (0.007) (0.010) (1.402) (0.008)   (0.008)
Unemployment (in %) 0.001 − 0.026* − 0.029** − 0.006 − 0.061* − 0.018 − 0.019 − 0.033* − 3.419 − 0.023*   − 0.025**
(0.010) (0.013) (0.012) (0.027) (0.030) (0.021) (0.012) (0.017) (2.740) (0.012)   (0.012)
Bourgeois parties in executive (as % of all members) 0.001 0.001 0.001 − 0.001 0.001 0.000 0.001 0.001 − 0.158 0.001   0.001
(0.002) (0.001) (0.001) (0.001) (0.002) (0.002) (0.001) (0.001) (0.168) (0.001)   (0.001)
Referendum stringency (index) − 0.010 − 0.015 0.006 0.002 0.019 − 0.062 − 0.009 − 0.004 − 0.991   0.003 0.004
(0.022) (0.013) (0.014) (0.017) (0.039) (0.069) (0.012) (0.015) (2.124)   (0.008) (0.011)
Accounting standard (index) − 0.081 − 0.101* − 0.256*** 0.007 − 0.347** − 0.076 − 0.099* − 0.117* 2.263   − 0.085* − 0.100*
(0.054) (0.050) (0.091) (0.043) (0.164) (0.075) (0.051) (0.068) (3.600)   (0.047) (0.055)
Debt brake (index) 0.019 0.014 0.000 − 0.003 − 0.086 − 0.064 0.004 0.025 2.700   0.002 0.021
(0.036) (0.015) (0.023) (0.024) (0.055) (0.072) (0.015) (0.021) (2.863)   (0.011) (0.026)
Election year (dummy) 0.035 0.041 0.049 0.034* 0.062 0.513*** 0.041 0.044 3.256   0.042 0.036
(0.027) (0.028) (0.036) (0.019) (0.039) (0.175) (0.027) (0.030) (3.120)   (0.027) (0.027)
Risk-free rate (in basis points)          0.226***    
         (0.046)    
N 841 841 618 841 841 841 841 773 884 841 841 841
Number of groups 26 26 26 26 26 26 26 24 26 26 26 26
Number of instruments   41 45 105 41 47 47 41 41 33 29 29
F statistic entire model 88.22 68.62*** 71.82** 53.68*** 28.79*** 73.39*** 81.45*** 100.60*** 823.49*** 62.25*** 41.56*** 46.70***
Hansen statistic (chi2)   8.54 9.27 0.00 8.54 7.80 10.44 8.04 8.97 12.17 15.08 16.18
AR(1)   − 2.74*** − 2.37** − 3.41*** − 2.73*** − 3.04*** − 2.75*** − 2.62*** − 2.77** − 2.68*** − 2.48** − 2.75***
AR(2)   1.11 0.98 0.80 1.08 − 0.52 1.06 0.79 1.01 1.20 1.09 1.12
  1. Notes: System GMM estimation (one-step) with standard errors corrected for finite samples and clustered at cantonal level in parentheses. Significance levels: ***1%; **5%, and *10%. The dependent variable is the subsequent (t + 1) cantonal log of the spread between the interest rate on the debt and the risk-free rate. Endogenous regressors: “lagged dependent variable” and debt per capita (except in model 4); instruments: tax revenue forecasting misestimations, GMM-style instruments of endogenous regressors (lags 2 to 3, collapsed)