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Aggregate local public sector investment and shocks: Norway 1946 - 1990


  • Jorn Rattso


Local public sector investment is determined in an environment of shifting economic conditions. Investments are investigated using an intertemporal decision model allowing for tests of forward looking behaviour and adjustments to expected and unexpected shocks. The econometric analysis of the aggregate local public sector over the period 1946-1990 indicates that local and county governments are forward looking and have small adjustment costs to investment. In a full investment demand model, only unexpected changes of gross domestic product and unemployment are shown to be important in the short run. The central government has arranged stable revenue growth of the local public sector, but greater volatility in macroeconomic conditions has led to fluctuations in local public investment.

Suggested Citation

  • Jorn Rattso, 1999. "Aggregate local public sector investment and shocks: Norway 1946 - 1990," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 577-584.
  • Handle: RePEc:taf:applec:v:31:y:1999:i:5:p:577-584
    DOI: 10.1080/000368499324020

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    Cited by:

    1. Luc Eyraud & Marialuz Moreno Badia, 2013. "Too Small to Fail? Subnational Spending Pressures in Europe," IMF Working Papers 13/46, International Monetary Fund.
    2. Jean-Michel Josselin & Fabio Padovano & Yvon Rocaboy, 2013. "Grant legislation vs. political factors as determinants of soft budget spending behaviors. Comparison between Italian and French regions," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(3), pages 317-354, December.
    3. Lars Håkonsen & Knut Løyland, 2016. "Local government allocation of cultural services," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 40(4), pages 487-528, November.

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