An examination of the dynamic behaviour of local governments using GMM bootstrapping methods

Matz Dahlberg () and Eva Johansson
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Eva Johansson: Department of Economics, Uppsala University, Box 513, SE-751 20 Uppsala, Sweden, Postal: Department of Economics, Uppsala University, Box 513, SE-751 20 Uppsala, Sweden
Authors registered in the RePEc Author Service: Eva Mörk ()

Journal of Applied Econometrics, 2000, vol. 15, issue 4, 401-416

Abstract: Even though recent Monte Carlo evidence has shown that the use of bootstrap critical values, instead of asymptotic ones, improves the size of the tests substantially, empirical applications using GMM bootstrap techniques are largely missing. In this paper, the dynamic relationship between local government revenues and expenditures is re-investigated using GMM bootstrapping techniques on a panel of 265 Swedish municipalities over the period 1979-1987. A lag of one year is found in the expenditures equation, while no dynamics is found in the own-source revenues and grants equations. These results, while contrasting sharply with those obtained when asymptotic critical values are used, are well in line with the theoretical explanations given in the literature for dynamic behaviour in the local public sector. Copyright © 2000 John Wiley & Sons, Ltd.

Date: 2000
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Related works:
Working Paper: An Examination of the Dynamic Behavior of Local Governments Using GMM Bootstrapping Methods (1997)
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