Institutions and Public Sector Performance: Empirical Analyses of Revenue Forecasting and Spatial Administrative Structures

This book analyzes the role of institutions in public finance, focusing on the issues of revenue forecasting and the spatial administrative structure of municipalities. Chapter 2 analyzes the international differences in forecasting practices and shows that forecasting performance depends on the institutional arrangement. The performance turns out to improve with the degree of independence, but also hinges on the timing of the forecast. Chapter 3 looks into revenue forecasting in Germany and widely confirms the unbiasedness and efficiency of the forecasts. Only with regard to tax law changes and the term of office there appears to be some room to improve the forecasts. In Chapter 4 we turn to local policies and provide evidence how the design of borders impacts on local tax policy. Both the number of competitors and the size of a core city in its agglomeration prove important. Chapter 5 analyzes the effects of reforms of spatial administrative structures. Considering the reforms in Germany in the 1960s and 1970s, we show that incorporated surrounding municipalities of core cities perform better in terms of population growth than comparable municipalities that have remained independent.