Advanced Search
MyIDEAS: Login to save this article or follow this journal

Local public expenditure with piecewise-linear nonconvex budget constraints

Contents:

Author Info

  • F Revelli

Abstract

The author analyses local authority expenditure decisions under the Block Grant system, that is, the grant distribution scheme that was in place in Britain from 1981 to 1990. The Block Grant system creates a piecewise-linear, and potentially nonconvex, budget constraint. As the choice of segment is endogenous -- either as a result of unobserved preference heterogeneity or as a result of random optimisation error -- a demand function for local public expenditure cannot be consistently estimated by ordinary least squares (OLS). Instead, a two-error maximum likelihood (ML) estimation procedure is used. The results show a positive income effect and a negative price effect, both of high significance. The OLS estimate of the price coefficient is underestimated relative to its ML counterpart -- because of spurious positive correlation between expenditure and price -- but the OLS estimate of the income coefficient does not show a substantial bias. The two-error ML estimation results show significant evidence of unobserved preference heterogeneity and some weaker evidence of random optimisation error.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.envplan.com/abstract.cgi?id=c170195
File Function: abstract
Download Restriction: Fulltext access restricted to subscribers, see http://www.envplan.co.uk/C.html for details

File URL: http://www.envplan.com/epc/fulltext/c17/c170195.pdf
File Function: main text
Download Restriction: Fulltext access restricted to subscribers, see http://www.envplan.co.uk/C.html for details

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Pion Ltd, London in its journal Environment and Planning C: Government and Policy.

Volume (Year): 17 (1999)
Issue (Month): 2 (April)
Pages: 195-210

as in new window
Handle: RePEc:pio:envirc:v:17:y:1999:i:2:p:195-210

Contact details of provider:
Web page: http://www.pion.co.uk

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pio:envirc:v:17:y:1999:i:2:p:195-210. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Neil Hammond).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.