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Competition in the allocation of public spending: a new model to analyse the interaction between expenditure categories

Author

Listed:
  • JULIAN RAMAJO

    (UNIVERSITY OF EXTREMADURA)

  • JAVIER SALINAS

    (UNIVERSITY OF EXTREMADURA / INSTITUTE FOR FISCAL STUDIES)

  • FRANCISCO PEDRAJA

    (UNIVERSITY OF EXTREMADURA)

  • MIGUEL MÁRQUEZ

    (UNIVERSITY OF EXTREMADURA)

Abstract

Starting from the median voter model commonly used in the literature to analyse the determinants of the functional distribution of public spending, we propose a new multiproduct dynamic model that also allows one to classify the nature of the interaction –complementarity or substitutability– between the different categories of government expenditure. As empirical application, we examine the pattern of public spending in Spain from 1990 to 1997. The results show that the basic determinants of the different items of expenditure are per capita income, population, the size of the public sector, and the presence of budget deficits, and that there are significant interdependencies between some components of the public expenditure.

Suggested Citation

  • Julian Ramajo & Javier Salinas & Francisco Pedraja & Miguel Márquez, 2007. "Competition in the allocation of public spending: a new model to analyse the interaction between expenditure categories," Economics Bulletin, AccessEcon, vol. 8(4), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-06h50003
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    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H1 - Public Economics - - Structure and Scope of Government

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