 Public spending and economies of scale in partial fiscal decentralized governments: The case of ChileAlicia Chavez and Dusan Paredes Socio-Economic Planning Sciences, 2023, vol. 87, issue PB Abstract: This article evaluates economies of scale in local public spending in Chile, emphasizing the country's geographical features and high fiscal heterogeneity. We leverage balanced panel data for ten years and 307 municipalities in order to estimate the population level at which a reduction in the average cost of local public goods provision occurs and to differentiate between levels of market potential. We follow a theoretical model of cost efficiency that considers spatial interactions and spillover effects among neighboring jurisdictions. Our findings suggest that Chilean municipalities reach an optimum population level at around 700,000 inhabitants, which is high considering that only two cities qualify. When differentiating for levels of economies of scale according to levels of market potential, municipalities with a low potential reach their optimum at around 28,000 inhabitants, those with a medium potential reach it at approximately 124,000, and those with a high potential reach it at approximately 680,000. Keywords: Public finance; Public goods; Government spending; Partial decentralization (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:soceps:v:87:y:2023:i:pb:s0038012123000903 DOI: 10.1016/j.seps.2023.101590 Access Statistics for this article Socio-Economic Planning Sciences is currently edited by Barnett R. Parker More articles in Socio-Economic Planning Sciences from Elsevier |
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