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Stochastic Frontiers and Technical Efficiency of Local Public Expenditure in Mexico

Author

Listed:
  • Alejandro U. Becerra Ornelas

    (Division of Economics, CIDE)

  • Héctor M. Núñez

    (Division of Economics, CIDE)

Abstract

This work analyses the effect of the institutional design of public spending on the technical efficiency. The model controls the technical efficiency with two institutional variables for earmarked and autonomous revenues and assess them using two stochastic frontier models. The main findings show that the expenditure of municipalities, regardless of its type, reduces to the technical efficiency of local production. These results support the Brennan-Buchanan collusion hypothesis that descentralization generates an increment in government spending, but it is not translated into better population welfare.

Suggested Citation

  • Alejandro U. Becerra Ornelas & Héctor M. Núñez, 2017. "Stochastic Frontiers and Technical Efficiency of Local Public Expenditure in Mexico," Working papers DTE 603, CIDE, División de Economía.
    • Handle: RePEc:emc:wpaper:dte603
    as

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    File URL: http://www.economiamexicana.cide.edu/RePEc/emc/pdf/DTE/DTE603.pdf
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    References listed on IDEAS

    as
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    Keywords

    stochastic frontier; technical efficiency; earmarked and autonomous revenues; local economies;
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