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On The Determinants Of Local Government Performance: A Two-Stage Nonparametric Approach

  • Emili Tortosa Ausina

    ()

    (Universitat Jaume I)

  • Diego Prior

    (Universidad Autónoma de Barcelona)

  • María Teresa Balaguer-Coll

    (Universitat Jaume I)

This article analyzes the efficiency of Comunitat Valenciana (Spain) local governments and their main explanatory variables. The analysis is performed in two stages. Firstly, efficiency is measured via (nonparametric) activity analysis techniques. The measurement techniques also enable the sources of inefficiency to be identified, i.e., whether inefficiencies are primarily overall cost, technical, or allocative. The second stage identifies some critical determinants of efficiency, focusing both on political and fiscal policy variables. In contrast to previous two-stage research studies, our approach performs the latter attempt via nonparametric smoothing techniques, rather that econometric methods ?such as OLS or Tobit related. Results show that inefficiencies are largely attributable to allocative factors, resulting in a notable gap between cost and technical efficiency. Inefficiencies are also larger for small municipalities. However, they are not exclusively attributable to poor management, as second-stage analysis reveals both fiscal and policy variables, either within or outside local governments control, to be explicably related to municipalities? performance. Este trabajo analiza la eficiencia de las corporaciones locales de la ComunidadValenciana y sus factores determinantes. El análisis se lleva a cabo en dos etapas. Enprimer lugar, la eficiencia es medida a través de técnicas (no paramétricas) de análisisde la actividad. El empleo de este tipo de técnicas permite también identificar lasfuentes de ineficiencia, esto es, si esta es básicamente en costes, técnica o de carácterasignativo. La segunda etapa identifica algunos determinantes clave de la eficiencia,centrándose tanto en variables políticas, así como de política fiscal. Frente a estudiosprevios en dos etapas, nuestro enfoque lleva a cabo este último objetivo a través detécnicas no paramétricas de suavizado, en lugar de métodos econométricos (tales comoMCO o modelos Tobit). Los resultados indican que las ineficiencias son atribuibles engran parte a factores asignativos, dando lugar a un margen considerable entreeficiencia en costes y eficiencia técnica. La ineficiencia también es mayor para lascorporaciones locales más pequeñas. Sin embargo, no es atribuible exclusivamente auna gestión deficiente, pues el análisis de segunda etapa muestra que tanto lasvariables políticas como las de política fiscal, independientemente de si están o no bajoel control de las corporaciones locales, se hayan relacionadas con su nivel de eficiencia.

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File URL: http://www.ivie.es/downloads/docs/wpasec/wpasec-2004-04.pdf
File Function: Fisrt version / Primera version, 2004
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie EC with number 2004-04.

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Length: 35 pages
Date of creation: Jan 2004
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasec:2004-04
Contact details of provider: Postal: C/ Guardia Civil, 22, Esc 2a, 1o, E-46020 VALENCIA
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Web page: http://www.ivie.es/
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