Myopic or constrained by balanced-budget-rules? The intertemporal spending behavior of Norwegian local governments

Lars-Erik Borge () and Per Tovmo ()
Additional contact information
Per Tovmo: Centre for Economic Research, Norwegian University of Science and Technology, http://www.svt.ntnu.no/iso/per.tovmo/default.htm

Working Paper Series from Department of Economics, Norwegian University of Science and Technology

Abstract: The paper analyzes the intertemporal spending behavior of Norwegian local governments with particular attention to liquidity constraints imposed by balanced-budget-rules (BBRs). The main findings are: (i) On average, local government spending behavior is neither perfectly forward looking nor fully myopic. (ii) Local governments with good fiscal conditions behave more forward looking than other local governments. (iii) A high degree of party fragmentations is associated with less forward looking behavior. The overall assessment is that the departure from rational forward looking behavior reflects both liquidity constraints imposed by BBRs and myopic behavior.

Keywords: Balanced-budget-rules; Intertemporal spending behavior; Consumption smoothing; Local government (search for similar items in EconPapers)
JEL-codes: D91 H72 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-06-15
New Economics Papers: this item is included in nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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http://www.svt.ntnu.no/iso/WP/2007/5BBR_WP.pdf (application/pdf)

Related works:
Journal Article: Myopic or Constrained by Balanced-Budget Rules? The Intertemporal Spending Behavior of Norwegian Local Governments (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:nst:samfok:8807

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