Spatial Strategic Interaction on Public Expenditures of The Northern Portuguese Local Governments
AbstractThe existence of spatial strategic interaction between neighbouring local governments is often referred in literature and identified in empirical applications for several countries. The spatial interaction in local government expenditure finds support on three theoretical explanations: spillover effects, Tiebout competition or mimicking behaviour. Identify the adequate explanation for the local government interaction is not an easy task since the reduced form of the estimated model can generate indistinguishable pattern in spatial interactions. This paper seeks to identify between those theoretical explanations what is the underlying reason for spatial interaction in public expenditures among local governments for the case of a particular sub-area of Portugal. Using differentiated model configurations and the local government expenditures of the municipalities composing the Northern Portuguese mainland, between 1998 and 2008, the paper identifies the structural model that generates the observed spatial auto-correlation in local public expenditures. Among the various theoretical reasons, only the existence of spillovers effects finds support.
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Bibliographic InfoPaper provided by CIEO-Research Centre for Spatial and Organizational Dynamics, University of Algarve in its series Spatial and Organizational Dynamics Discussion Papers with number 2011-2.
Length: 16 pages
Date of creation: 31 Mar 2011
Date of revision:
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local public expenditures; horizontal spatial interaction; spatial econometrics;
Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-14 (All new papers)
- NEP-GEO-2011-11-14 (Economic Geography)
- NEP-PBE-2011-11-14 (Public Economics)
- NEP-URE-2011-11-14 (Urban & Real Estate Economics)
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