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Stochastic Frontiers and Technical Efficiency of Local Public Expenditure in Mexico

Alejandro U. Becerra Ornelas and Hector Nuñez ()
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Alejandro U. Becerra Ornelas: Division of Economics, CIDE

No DTE 603, Working papers from CIDE, División de Economía

Abstract: This work analyses the effect of the institutional design of public spending on the technical efficiency. The model controls the technical efficiency with two institutional variables for earmarked and autonomous revenues and assess them using two stochastic frontier models. The main findings show that the expenditure of municipalities, regardless of its type, reduces to the technical efficiency of local production. These results support the Brennan-Buchanan collusion hypothesis that descentralization generates an increment in government spending, but it is not translated into better population welfare.

Keywords: stochastic frontier; technical efficiency; earmarked and autonomous revenues; local economies (search for similar items in EconPapers)
Pages: 32 pages
Date: 2017-02
New Economics Papers: this item is included in nep-eff
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