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An Investigation into the Intertemporal Spending Path of Local Government in Mauritius

Author

Listed:
  • Sanju Naraidoo

    (Sanju Naraidoo (corresponding author) is at the Department of Accounting, Finance and Law, Curtin Mauritius.)

  • Sanjeev K. Sobhee

    (Sanjeev K. Sobhee is at the Department of Economics and Statistics, Faculty of Social Sciences and Humanities, University of Mauritius; email: sksobhee@uom.ac.mu)

Abstract

This article examines whether local government expenditure in Mauritius is characterised by an intertemporal decision-making path. In other words, to what extent does local government expenditure respond to contemporaneous changes in revenues. In this respect, the article contributes to the existing body of literature by exploring the context of an upper-middle-income country like Mauritius while factoring intertemporal choice in the supply of local public goods. Moreover, the article determines the short-run and long-run responsiveness of local public expenditure to Gross Domestic Product (GDP) through an error correction model based on time series data for Mauritius over the period 1987–2017. Our findings indicate that local government spending becomes less sensitive to its previous values when GDP and its past values are introduced as control variables in the model. Local government expenditure and real output are also found to be co-integrated or to share a long-term relationship. JEL Classification: B22, C1, D9, H4, H11

Suggested Citation

  • Sanju Naraidoo & Sanjeev K. Sobhee, 2020. "An Investigation into the Intertemporal Spending Path of Local Government in Mauritius," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(4), pages 432-453, November.
    • Handle: RePEc:sae:mareco:v:14:y:2020:i:4:p:432-453
    DOI: 10.1177/0973801020953398
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    References listed on IDEAS

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    More about this item

    Keywords

    Local government expenditure; Intertemporal spending; Mauritius; Cointegration; GDP growth; Error correction model; Time series;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • H4 - Public Economics - - Publicly Provided Goods
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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