Asymmetric and Non-Linear Adjustments in Local Fiscal Policy

Gabriella Legrenzi () and Costas Milas

No KERP 2006/16, Keele Economics Research Papers from Centre for Economic Research, Keele University

Abstract: We introduce possible asymmetries and non-linearities in the analysis of the taxing and spending decisions of local governments. Our empirical results evidence a down-ward inflexibility of both local government spending and taxation, pointing to a budget-maximizing local government. These asymmetries will need to be explicitly tackled in fiscal federalism reforms, in order for decentralization to positively contribute to the achievement of the European Monetary Union objectives.

Keywords: Fiscal federalism; non-linear time series; asymmetric adjustment; fly-paper effect (search for similar items in EconPapers)
JEL-codes: H10 H71 C22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-ure
Date: Written
Note: An earlier version of this paper has been presented at the North American Summer Meeting of the Econometric Society, and at the annual meeting of the European Public Choice Society. We would like to thank the participants for their useful feedback. The usual disclaimer applies.
View list of references

Downloads: (external link)
http://www.keele.ac.uk/depts/ec/wpapers/kerp0616.pdf (application/pdf)

Related works:
Working Paper: Asymmetric and Non-Linear Adjustments in Local Fiscal Policy (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:kee:kerpuk:2006/16

Ordering information: This working paper can be ordered from
Centre for Economic Research, Research Institute for Public Policy and Management, Keele University, Staffordshire ST5 5BG - United Kingdom
http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

Access Statistics for this paper

More papers in Keele Economics Research Papers from Centre for Economic Research, Keele University
Address: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Contact information at EDIRC.
Series data maintained by Martin E. Diedrich ().