The Political Economy of Local Governments' Expenditures

Linda Veiga

No 8/2002, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: Although the literature on the political economy of public finance is already quite extensive, most articles analyse the behaviour of central governments. Furthermore, studies about the Portuguese economy are scarce. The present article contributes for a better understanding of these phenomena by testing the influence of political factors on municipal expenditure decisions in Portugal. The dataset used in the empirical work has information for all mainland Portuguese municipalities from 1979 to 2000. The tests performed reveal that local politicians increase capital expenditures before elections, particularly on roads and streets construction. Results also indicate that when the mayor belongs to the party that dominates the municipal assembly capital expenditures are higher. Finally, no support was found for partisan effects on incumbents’ investment expenditures choices.

Keywords: political economy; local public finance; politics; Portugal. (search for similar items in EconPapers)
Date: 2002
New Economics Papers: this item is included in nep-geo, nep-pol and nep-ure
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Citations: View citations in EconPapers (3)

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