Strategic Interaction in Local Fiscal Policy: Evidence from Portuguese Municipalities
AbstractThis paper aims at testing the degree of interaction between Portuguese municipalities’ expenditure levels by estimating a dynamic panel model, based on jurisdictional reaction functions. The analysis is performed for all 278 Portuguese mainland municipalities from 1986 to 2006, using alternative ways to measure neighbourhood. Results indicate that local governments’ spending decisions are significantly influenced by the actions of neighbouring municipalities. For total expenditures, there is evidence that a 10% increase in nearby municipalities’ expenditures boosts expenditures in a given municipality by around 3.8%.
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Bibliographic InfoPaper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 23/2011.
Date of creation: 2011
Date of revision:
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Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-21 (All new papers)
- NEP-GEO-2011-07-21 (Economic Geography)
- NEP-POL-2011-07-21 (Positive Political Economics)
- NEP-URE-2011-07-21 (Urban & Real Estate Economics)
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