Evaluation of the fiscal effect on municipal mergers: Quasi-experimental evidence from Japanese municipal data

Haruaki Hirota and Hideo Yunoue

MPRA Paper from University Library of Munich, Germany

Abstract: The purpose of this paper is to evaluate a fiscal common pool problem in Japanese municipal mergers. Specifically, we investigated whether the merged municipalities rapidly their increase expenditures and debt just before mergers. Because the likelihood of Japanese municipal mergers depends on a municipality's characteristics such as population size, area, and fiscal conditions, municipal mergers are a non-voluntary and non-random phenomenon in Japan. Therefore, identify causal effects by applying propensity score matching within a differences-in-differences framework to address the problems of endogeneity bias and sample selection bias. In particular, we focus on the subordinate merger partner in absorption-type merger. Our results show that the subordinate merger partner suffers from adverse fiscal conditions and creates the fiscal common pool problem in public projects just before mergers.

Keywords: fiscal common pool problem; municipal mergers; propensity score matching with differences-in-differences; average treatment effect on treated; subordinate merger partner (search for similar items in EconPapers)
JEL-codes: H72 H73 H74 (search for similar items in EconPapers)
Date: 2016-01-18
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/68890/1/MPRA_paper_68890.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/72455/23/MPRA_paper_72455.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/89157/23/MPRA_paper_72455.pdf revised version (application/pdf)

Related works:
Journal Article: Evaluation of the fiscal effect on municipal mergers: Quasi-experimental evidence from Japanese municipal data (2017)
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