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Do local government fiscal spillovers exist? Evidence from counties, municipalities, and school districts

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  • Isen, Adam

Abstract

Numerous theories posit that the fiscal decisions of one jurisdiction influence the fiscal decisions of its neighbors. The main contribution of this paper is to address empirical difficulties in testing for spillovers using a regression discontinuity design on a newly collected dataset. I utilize close elections from this large dataset of local referenda in Ohio to isolate the effect of exogenous increases in taxation and spending of one jurisdiction on neighbors' fiscal decisions. For all jurisdictional types and referenda revenue sources (bonds, income, property, and sales tax), there is no evidence of spillovers, and relatively small effects can be ruled out.

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  • Isen, Adam, 2014. "Do local government fiscal spillovers exist? Evidence from counties, municipalities, and school districts," Journal of Public Economics, Elsevier, vol. 110(C), pages 57-73.
    • Handle: RePEc:eee:pubeco:v:110:y:2014:i:c:p:57-73
    DOI: 10.1016/j.jpubeco.2013.12.005
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    More about this item

    Keywords

    Fiscal spillovers; Inter-jurisdictional competition; Taxes and spending;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H4 - Public Economics - - Publicly Provided Goods
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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