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What drives local government spending in Spain? A dynamic spatial panel approach

Vicente Rios (), Pedro Pascual and Fermín Cabases

Spatial Economic Analysis, 2017, vol. 12, issue 2-3, 230-250

Abstract: What drives local government spending in Spain? A dynamic spatial panel approach. Spatial Economic Analysis. This paper extends traditional spatial spillover models of government spending by including dynamic effects and exogenous interaction effects. Using annual data for a sample of 3032 Spanish municipalities during 2000–12, we estimate a dynamic spatial Durbin panel data model to quantify the relevance of spatial spillovers and diffusion effects over time as well as the impact of a variety of spending determinants. We find that government spending at the local level is mainly explained by economic factors, while demographic factors and political factors appear to be less relevant.

Date: 2017
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DOI: 10.1080/17421772.2017.1282166

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