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How municipalities react to budgetary windfalls

Author

Listed:
  • Bruno Heyndels
  • Frank Van Driessche

Abstract

Using a panel of 308 observations over the period 1989–1996, we analyse how Flemish municipalities react to budgetary shocks. We address two questions: whether governments respond differently to tax than to grant windfalls and whether responses to positive and negative shocks are symmetric. Our results confirm the recent findings on U.S. local governments that reveal asymmetric responses to positive and negative windfalls. We also find evidence of different responsiveness to tax and grant windfalls. Copyright Springer-Verlag Berlin Heidelberg 2002

Suggested Citation

  • Bruno Heyndels & Frank Van Driessche, 2002. "How municipalities react to budgetary windfalls," Economics of Governance, Springer, vol. 3(3), pages 211-226, November.
  • Handle: RePEc:spr:ecogov:v:3:y:2002:i:3:p:211-226
    DOI: 10.1007/s101010100040
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    File URL: http://hdl.handle.net/10.1007/s101010100040
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    Citations

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    Cited by:

    1. Christofzik, Désirée I. & Schneider, Benny, 2019. "Fiscal policy adjustments to budget shocks: Evidence from German municipalities," Working Papers 10/2019, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    2. Antoni Castells & Alejandro Esteller & Maite Vilalta, 2004. "Full Characterisation of the Political Economy of Fiscal Adjustment: Evidence from Spanish Municipalities," Working Papers 2004/3, Institut d'Economia de Barcelona (IEB).
    3. repec:taf:pubmmg:v:37:y:2017:i:4:p:285-292 is not listed on IDEAS
    4. Albert Solé-Ollé & Elisabet Viladecans-Marsal, 2011. "Local spending and the housing boom," Working Papers 2011/27, Institut d'Economia de Barcelona (IEB).
    5. Antoni Castells & Alejandro Esteller & Maite Vilalta, 2004. "Full Characterisation of the Political Economy of Fiscal Adjustment: Evidence from Spanish Municipalities," Working Papers 2004/3, Institut d'Economia de Barcelona (IEB).
    6. John Ashworth & Bruno Heyndels, 2005. "Government Fragmentation And Budgetary Policy In "Good" And "Bad" Times In Flemish Municipalities," Economics and Politics, Wiley Blackwell, vol. 17, pages 245-263, July.
    7. Phuong Nguyen-Hoang & Yilin Hou, 2014. "Local Fiscal Responses to Procyclical Changes in State Aid," Publius: The Journal of Federalism, Oxford University Press, vol. 44(4), pages 587-608.
    8. Hopp, Daniel & Becker, Johannes & Kriebel, Michael, 2018. "Mental Accounting of Public Funds - The Flypaper Effect in the Lab," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181629, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Key words: Local government; public expenditures; windfalls; JEL Classification: H72; H77;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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