Spatial Strategic Interaction on Public Expenditures of The Northern Portuguese Local Governments

Ana Barreira ()
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Ana Barreira: University of Algarve, Postal: CIEO/Faculty of Economics, University of Algarve, Campus de Gambelas, 8005-139 Faro, Portugal, http://www.fe.ualg.pt

No 2011-2, Spatial and Organizational Dynamics Discussion Papers from CIEO-Research Centre for Spatial and Organizational Dynamics, University of Algarve

Abstract: The existence of spatial strategic interaction between neighbouring local governments is often referred in literature and identified in empirical applications for several countries. The spatial interaction in local government expenditure finds support on three theoretical explanations: spillover effects, Tiebout competition or mimicking behaviour. Identify the adequate explanation for the local government interaction is not an easy task since the reduced form of the estimated model can generate indistinguishable pattern in spatial interactions. This paper seeks to identify between those theoretical explanations what is the underlying reason for spatial interaction in public expenditures among local governments for the case of a particular sub-area of Portugal. Using differentiated model configurations and the local government expenditures of the municipalities composing the Northern Portuguese mainland, between 1998 and 2008, the paper identifies the structural model that generates the observed spatial auto-correlation in local public expenditures. Among the various theoretical reasons, only the existence of spillovers effects finds support.

Keywords: local public expenditures; horizontal spatial interaction; spatial econometrics (search for similar items in EconPapers)
JEL-codes: C33 C36 H72 H73 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2011-03-31
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:cieodp:2011_002

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