Advanced Search
MyIDEAS: Login to save this paper or follow this series

Yardstick competition and the political costs of raising taxes: An empirical analysis of Spanish municipalities

Contents:

Author Info

  • Núria Bosch

    ()
    (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))

  • Albert Solé

    ()
    (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))

Abstract

We test the "yardstick competition" hypothesis by looking at the effects of property tax increases both in the locality and in other comparable jurisdictions on the incumbents' vote. In order to obtain unbiased estimates of the effects of taxes on voting, we account for national political shocks, ideological preferences of the citizenship and government traits, and we estimate the vote equation using instrumental variables. We also allow various traits of the government (ideology, coalition government, and first term government) to mediate the effects of taxes on voting. The vote equation was estimated using a large database containing nearly 3,000 Spanish municipalities and analysing three local elections (1995, 1999 and 2003). The results suggest that property tax increases, both at municipality and neighbourhood level, have a non-negligible impact on incumbent votes, and that this impact is especially high when: the government is right-wing, is a coalition, and is not in its first term.

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://ieb.ub.edu/aplicacio/fitxers/505578ART150.pdf
Our checks indicate that this address may not be valid because: 403 FORBIDDEN (http://ieb.ub.edu/aplicacio/fitxers/505578ART150.pdf [301 Moved Permanently]--> http://www.ieb.ub.edu/aplicacio/fitxers/505578ART150.pdf). If this is indeed the case, please notify ()
Download Restriction: no

Bibliographic Info

Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2004/5.

as in new window
Length: 42 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:ieb:wpaper:505578art150

Contact details of provider:
Postal: Carrer del Tinent Coronel Valenzuela 1-11, 08034 Barcelona
Phone: 93 403 46 46
Fax: 93 403 98 32
Email:
Web page: http://www.ieb.ub.edu
More information through EDIRC

Related research

Keywords: Local government; Taxes; Voting; Yardstick competition;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Büttner, Thiess, 1998. "Local Business Taxation and Competition for Capital: The Choice of the Tax Rate," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 98-43, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2004. "Yardstick competition in intergovernmental relationships: theory and empirical predictions," Economics Letters, Elsevier, Elsevier, vol. 83(3), pages 325-333, June.
  3. Timothy Besley & Anne Case, 1992. "Incumbent Behavior: Vote Seeking, Tax Setting and Yardstick Competition," NBER Working Papers 4041, National Bureau of Economic Research, Inc.
  4. Wassmer, Robert W., 1993. "Property Taxation, Property Base, and Property Value: An Empirical Test of the 'New View'," National Tax Journal, National Tax Association, vol. 46(2), pages 135-59, June.
  5. Wrede, Matthias, 2001. "Yardstick competition to tame the Leviathan," European Journal of Political Economy, Elsevier, Elsevier, vol. 17(4), pages 705-721, November.
  6. Albert Solé Ollé, 2005. "The effects of party competition on budget outcomes: Empirical evidence from local governments in Spain," Working Papers, Institut d'Economia de Barcelona (IEB) 2005/2, Institut d'Economia de Barcelona (IEB).
  7. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 185, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Stuart Landon & David L. Ryan, 1997. "The Political Costs of Taxes and Government Spending," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 30(1), pages 85-111, February.
  9. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 21-36, March.
  10. Bloom, Howard S. & Ladd, Helen F., 1982. "Property tax revaluation and tax levy growth," Journal of Urban Economics, Elsevier, vol. 11(1), pages 73-84, January.
  11. Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 89-101, March.
  12. Peltzman, Sam, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 327-61, May.
  13. Revelli, Federico, 2002. "Local taxes, national politics and spatial interactions in English district election results," European Journal of Political Economy, Elsevier, Elsevier, vol. 18(2), pages 281-299, June.
  14. Francisco Jose Veiga & Linda Goncalves Veiga, 2004. "Popularity functions, partisan effects, and support in Parliament," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 16(1), pages 101-115, 03.
  15. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  16. Craig Brett & Joris Pinkse, 2000. "The determinants of municipal tax rates in British Columbia," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 33(3), pages 695-714, August.
  17. Federico Revelli, 2001. "Spatial patterns in local taxation: tax mimicking or error mimicking?," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 33(9), pages 1101-1107.
  18. Ladd, Helen F., 1991. "Property tax revaluation and tax levy growth revisited," Journal of Urban Economics, Elsevier, vol. 30(1), pages 83-99, July.
  19. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, Springer, vol. 50(1), pages 5-25, January.
  20. SALMON, Pierre, 1987. "Decentralization as an incentive scheme," Institut des Mathématiques Economiques – Document de travail de l’I.M.E. (1974-1993), Institut des Mathématiques Economiques. LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS, Un 98, Institut des Mathématiques Economiques. LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS, Université de Bourgogne.
  21. Sole Olle, Albert, 2003. "Electoral accountability and tax mimicking: the effects of electoral margins, coalition government, and ideology," European Journal of Political Economy, Elsevier, Elsevier, vol. 19(4), pages 685-713, November.
  22. Bordignon, Massimo & Cerniglia, Floriana & Revelli, Federico, 2003. "In search of yardstick competition: a spatial analysis of Italian municipality property tax setting," Journal of Urban Economics, Elsevier, vol. 54(2), pages 199-217, September.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Eric Dubois & Sonia Paty, 2010. "Yardstick Competition: Which Neighbours Matter?," Post-Print, HAL hal-00800705, HAL.
  2. Revelli Federico, 2008. "Performance Competition in Local Media Markets," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 200801, University of Turin.
  3. Finken, Jan, 2009. "Yardstick competition in German municipalities," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge, University of Cologne, FiFo Institute for Public Economics 09-3, University of Cologne, FiFo Institute for Public Economics.
  4. Agostini, Claudio A. & Brown, Philip H. & Zhang, Xiaobo, 2010. "Neighbor effects in the provision of public goods in a young democracy: Evidence from China," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1027, International Food Policy Research Institute (IFPRI).
  5. Lenka Šťastná, 2009. "Spatial Interdependence of Local Public Expenditures: Selected Evidence from the Czech Republic," Working Papers IES, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies 2009/12, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Mar 2009.
  6. Laura Bianchini & Federico Revelli, 2013. "Green Polities: Urban Environmental Performance and Government Popularity," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 25(1), pages 72-90, 03.
  7. Chiara Dalle Nogare & Matteo Galizzi, 2011. "The political economy of cultural spending: evidence from Italian cities," Journal of Cultural Economics, Springer, Springer, vol. 35(3), pages 203-231, August.
  8. Cláudio Burian Wanderley, 2010. "Evolução Da Arrecadação Tributária Municipal Em Minas Gerais No Início Do Novo Milênio," Anais do XIV Seminário sobre a Economia Mineira [Proceedings of the 14th Seminar on the Economy of Minas Gerais], Cedeplar, Universidade Federal de Minas Gerais, in: Anais do XIV Seminário sobre a Economia Mineira [Proceedings of the 14th Seminar on the Economy of Minas Gerais] Cedeplar, Universidade Federal de Minas Gerais.
  9. José da Silva Costa & Armindo Cravalho, 2013. "Yardstick Competition among Portuguese Municipalities: The Case of Urban Property Tax (IMI)," FEP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 495, Universidade do Porto, Faculdade de Economia do Porto.
  10. Kristien Werck & Bruno Heyndels & Benny Geys, 2008. "The impact of ‘central places’ on spatial spending patterns: evidence from Flemish local government cultural expenditures," Journal of Cultural Economics, Springer, Springer, vol. 32(1), pages 35-58, March.
  11. Geys, Benny & Osterloh, Steffen, 2012. "Borders as boundaries to fiscal policy interactions? An empirical analysis of politicians' opinions on rivals in the competition for firms," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism", Social Science Research Center Berlin (WZB) SP II 2012-113, Social Science Research Center Berlin (WZB).
  12. Shun-ichiro Bessho & Kimiko Terai, 2011. "Competition for private capital and central grants: the case of Japanese industrial parks," Economics of Governance, Springer, Springer, vol. 12(2), pages 135-154, June.
  13. Costas-Pérez, Elena & Solé-Ollé, Albert & Sorribas-Navarro, Pilar, 2012. "Corruption scandals, voter information, and accountability," European Journal of Political Economy, Elsevier, Elsevier, vol. 28(4), pages 469-484.
  14. Denvil Duncan & Ed Gerrish, 2014. "Personal income tax mimicry: evidence from international panel data," International Tax and Public Finance, Springer, Springer, vol. 21(1), pages 119-152, February.
  15. Pierre Salmon, 2013. "How significant is yardstick competition among governments? Three reasons to dig deeper," Working Papers, HAL hal-00830872, HAL.

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:ieb:wpaper:505578art150. 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: ().

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.