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Analysis on Determinant Factors of Local Government Expenditure with Panel Data Ridge Regression (in Korean)

Author

Listed:
  • Seung-Jun Park

    (Department of Economics, Daegu University)

  • Dae Chul Kim

    (Daegu Gyeongbuk Development Institute)

Abstract

The purpose of this study is to investigate the factors affecting the ratio of local governments expenditures based on 16 Korean state government panel data. Also, we employ ridge regression analysis to solve the multicollinearity problem caused by many explanatory variables. Socio-economic factors including real GRDP, population, etc and government factors like local officials are turned out to be statistically significant determining on the level of local government expenditure. However, political factors are not statistically significant in log real local government expenditure model. These results imply that local governments should consider all the socio-economic, political and government factors to accurately identify the financial expenditure levels of them and need to establish the corresponding public policies.

Suggested Citation

  • Seung-Jun Park & Dae Chul Kim, 2018. "Analysis on Determinant Factors of Local Government Expenditure with Panel Data Ridge Regression (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 24(1), pages 67-98, March.
    • Handle: RePEc:bok:journl:v:24:y:2018:i:1:p:67-98
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    Cited by:

    1. Hui Wang & Jinzhuo Wu & Wenshu Lin & Zhaoping Luan, 2023. "Carbon Footprint Accounting and Influencing Factors Analysis for Forestry Enterprises in the Key State-Owned Forest Region of the Greater Khingan Range, Northeast China," Sustainability, MDPI, vol. 15(11), pages 1-21, May.

    More about this item

    Keywords

    Local government expenditure; Ridge regression; Korea state government; Local fiscal policy;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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