Strategic fiscal interactions among local Governments in Colombia

Andrés Muñoz

Hacienda Pública Española / Review of Public Economics, 2016, vol. 219, issue 4, 161-188

Abstract: Using spatial panel data from most municipalities in Colombia for the period 2000-09, this paper pro-vides empirical evidence of the existence of strategic fiscal interactions in property and business taxation. However, there is little evidence of cut-throat tax competition that leads to a «race to the bottom.» Also, this paper shows that differences in property tax rates affect local election results and the popularity of the main political parties in the local councils, signaling the presence of yardstick competition in this source. The results suggest that country does not seem to require policy measures aimed at attenuating municipal tax competition.

Keywords: Decentralization; strategic fiscal interaction; tax competition; yardstick (search for similar items in EconPapers)
JEL-codes: H71 H73 H77 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:hpe:journl:y:2016:v:219:i:4:p:161-188

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