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The technical efficiency of local economies in Mexico: a failure of decentralized public spending

Alejandro U. Becerra-Ornelas and Hector Nuñez ()
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Alejandro U. Becerra-Ornelas: Pardee RAND Graduate School

The Annals of Regional Science, 2019, vol. 62, issue 2, No 1, 247-264

Abstract: Abstract This work analyses the effect of the institutional design of public spending on technical efficiency. The model controls for technical efficiency using institutional variables for earmarked and autonomous revenues and assesses them using two stochastic frontier models. The main findings show that expenditures by Mexican municipalities, regardless of type, reduce the technical efficiency of local production. Results support the Brennan–Buchanan collusion hypothesis that decentralization generates an increase in government spending, but it does not translate to higher social welfare.

JEL-codes: C2 H7 R1 R5 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s00168-018-0894-1

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