Spatial fiscal interactions among French municipalities within inter-municipal groups

Marie-Laure Breuillé () and Julie Le Gallo
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Marie-Laure Breuillé: CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement

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Abstract: Based on a unique data set of French municipalities and a large number of budgetary variables, we estimate the extent of spatial fiscal interaction among the 33,484 French municipalities in 2008 by accounting for inter-municipal cooperation. Using a spatial autoregressive model with inter-municipal group fixed effects, we show that spatial interactions among French municipalities are inflated by correlated effects that affect similarly municipalities that cooperate together. Removing these confounding effects leads to considerably smaller positive spatial interactions for tax decisions and even negative ones for capital expenditures. In addition, we observe a clear distinction between complementary choices on current budget items and substitutable choices on capital budget items.

Keywords: Inter-municipal cooperation; spatial autocorrelation; fiscal decisions interaction; C31; H71; H72 (search for similar items in EconPapers)
Date: 2017-02-15
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Published in Applied Economics, 2017, 49 (46), pp.4617-4637. ⟨10.1080/00036846.2017.1287861⟩

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Journal Article: Spatial fiscal interactions among French municipalities within inter-municipal groups (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02943323

DOI: 10.1080/00036846.2017.1287861

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