Strategic Interaction in Local Fiscal Policy: Evidence from Portuguese Municipalities

Hélia Silva (), Linda Veiga and Miguel Portela ()
Additional contact information
Hélia Silva: European University Institute
Authors registered in the RePEc Author Service: Hélia Costa

No 23/2011, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: This paper aims at testing the degree of interaction between Portuguese municipalities’ expenditure levels by estimating a dynamic panel model, based on jurisdictional reaction functions. The analysis is performed for all 278 Portuguese mainland municipalities from 1986 to 2006, using alternative ways to measure neighbourhood. Results indicate that local governments’ spending decisions are significantly influenced by the actions of neighbouring municipalities. For total expenditures, there is evidence that a 10% increase in nearby municipalities’ expenditures boosts expenditures in a given municipality by around 3.8%.

Keywords: spending interactions; local government; spatial econometrics; dynamic panel data (search for similar items in EconPapers)
JEL-codes: C23 H7 R1 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-geo, nep-pol and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www3.eeg.uminho.pt/economia/nipe/docs/2011/NIPE_WP_23_2011.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nip:nipewp:23/2011

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in NIPE Working Papers from NIPE - Universidade do Minho Núcleo de Investigação em Políticas Económicas e Empresariais, Escola de Economia e Gestão, Universidade do Minho, P-4710-057 Braga, Portugal. Contact information at EDIRC.
Bibliographic data for series maintained by NIPE ().