The paper analyses the main determinants of the regional allocation of infrastructure investment.The estimated investment equation is derived from a general specification of the government's objective function (Berhman and Craig, AER, 1987), which accounts both for the equity-efficiency trade-off and for deviations from this rule arising from political factors. The reaction of investment to changes in the regional output tells us about the strength of the equity-efficiency trade-off. The main political factor considered is the incumbent's marginal probability of gaining/loosing a regional representative in the national legislature. The equation is estimated with a panel of data on investment and capital stock of transportation infrastructure (i.e., roads, rails, ports and airports) for the Spanish departments (NUTS3) during the period 1987-96. We use a dynamic specification of the equation that allows for slow adjustment and which is estimated by GMM methods (Arellano and Bond, 1991).The results suggest that efficiency criteria play only a limited role in the geographical distribution of goverment's infrastructure investment. Regional specific infrastructure needs and political factors appear also as factors explaining the regional allocation of infrastructure investment.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this paper we test the hypothesis that municipalities aligned with upper-tier grantor governments (i.e., controlled by the same party) will receive more grants than those that are unaligned. We use a rich Spanish database, which provides information on grants received by nearly 900 municipalities during the period 1993-2003 from three different upper-tier governments (i.e., Central, Regional and Upper-local). Since three elections were held at each tier during this period, we have enough within-municipality variation in partisan alignment to provide differences-in-differences estimates of the effects of alignment on the amount of grants coming from each source. Moreover, the fact that a municipality may simultaneously receive grants from aligned and unaligned grantors allows us to use a tripledifferences estimator, which consists of estimating the effects of changing alignment status on the change in grants coming from the aligned grantors relative to the change in grants coming from the unaligned ones. The results suggest that partisan alignment has a sizeable positive effect on the amount of grants received by municipalities. Terms of use: Documents inJEL Code: C72, D72.

No abstract

The paper presents a framework for measuring spillovers resulting from local expenditure policies. We identify and test for two different types of expenditure spillovers: (i) "benefit spillovers", arising from the provision of local public goods, and (ii) "crowding spillovers", arising from the crowding of facilities by residents in neighboring jurisdictions. Benefit spillovers are accounted for by assuming that the representative resident enjoys the consumption of a local public good in both his own community and in those surrounding it. Crowding spillovers are included by considering that a locality's consumption level is influenced by the population living in the surrounding localities. We estimate a reaction function, with interactions between local governments occurring not only between expenditure levels, but also between neighbors' populations and expenditures. The equation is estimated using data on more than 2,500 Spanish local governments for the year 1999. The results show that both types of spillovers are relevant.

No abstract

This paper examines the impact of urban sprawl, a phenomenon of particular interest in Spain, which is currently experiencing this process of rapid, low-density urban expansion. Many adverse consequences are attributed to urban sprawl (e.g., traffic congestion, air pollution and social segregation), though here we are concerned primarily with the rising costs of providing local public services. Our initial aim is to develop an accurate measure of urban sprawl so that we might empirically test its impact on municipal budgets. Then, we undertake an empirical analysis using a cross-sectional data set of 2,500 Spanish municipalities for the year 2003 and a piecewise linear function to account for the potentially nonlinear relationship between sprawl and local costs. The estimations derived from the expenditure equations for both aggregate and six disaggregated spending categories indicate that low-density development patterns lead to greater provision costs of local public services.Keywords: Urban sprawl, local public spending.JEL Codes: H1, H72, R51.RESUMEN: En el presente trabajo se analiza el impacto de la dispersión urbana, un fenómeno de especial interés en España, donde destaca la rapidez con la que este proceso de desarrollo urbano de baja densidad esta teniendo lugar actualmente. A pesar de la diversidad de consecuencias atribuidas a la dispersión urbana (tales como congestión del tráfico, contaminación o segregación social), aquí nos centramos en analizar el incremento en el coste de provisión de los servicios públicos locales. Con este objetivo, en primer lugar definimos una medida precisa de dispersión urbana que nos permita analizar empíricamente su impacto sobre los presupuestos municipales. En segundo lugar, llevamos a cabo un análisis empírico con datos de corte transversal para 2.500 municipios españoles referidos al año 2003 y una función lineal por tramos que recoge la posible relación no lineal existente entre la dispersión urbana y los costes. Las estimaciones obtenidas para las ecuaciones de gasto tanto a nivel agregado como para las seis categorías de gasto consideradas muestran que los desarrollos urbanos de baja densidad incrementan el coste de provisión de los servicios públicos locales.Palabras clave: Dispersión urbana, gasto público local. Clasificación JEL: H1, H72, R51.a Comments are welcome. The opinions expressed in the paper do not necessarily reflect the IEB's opinions. b We acknowledge financial support from SEJ2006-15212 research funding. We are grateful to participants at several seminars and conferences and, in particular, to John Carruthers for their valuable comments.

This paper investigates the link between local budget outcomes and the intensity of party competition, measured as the margin of victory obtained by the incumbent in the previous local election (i.e. the difference between the vote share and 50%). Two competing hypotheses are tested in the paper. On the one hand, the Leviathan government hypothesis suggests that the lower the intensity of party competition is, the greater is the increase in the size of the local public sector, irrespective of the ideology of the party in power. On the other hand, the Partisan government hypothesis suggests that the incumbent will find it easier to advance its platform when intensity of competition is low (i.e., parties on the left/right will increase/decrease the size of the local public sector when the intensity of the challenge from the opposition is low). These hypotheses are tested with information on spending, own revenues and deficit for more than 500 Spanish local governments over 8 years (1992–1999), and information on the results of two local electoral contests (1991 and 1995). The evidence favors the Partisan hypothesis over the Leviathan one. We found that, for left-wing governments, spending, taxes and deficits increased as the electoral margin increases; whereas, for right-wing governments, a greater margin of victory led to reductions in all these variables. Copyright Springer Science + Business Media, Inc. 2006

We test the 'yardstick competition' hypothesis by looking at the effects of property tax increases both in the locality and in other comparable jurisdictions on the incumbents' vote. In order to obtain unbiased estimates of the effects of taxes on voting, we account for national political shocks, ideological preferences of the citizenship and government traits, and we estimate the vote equation using instrumental variables. We also allow various traits of the government (ideology, coalition government, and first term government) to mediate the effects of taxes on voting. The vote equation was estimated using a large database containing nearly 3,000 Spanish municipalities and analysing three local elections (1995, 1999 and 2003). The results suggest that property tax increases, both at municipality and neighbourhood level, have a non-negligible impact on incumbent votes, and that this impact is especially high when: the government is right-wing, is a coalition, and is not in its first term.Keywords: Yardstick competition, voting, local government, taxes JEL Classification: H71; H73 RESUMEN: Contrastamos la hipótesis de "competencia referencial" a través del examen de los efectos sobre los votos obtenidos por el partido en el gobierno de un aumento de los impuestos sobre la propiedad en una determinada localidad y en otras jurisdicciones comparables. A fin de poder obtener estimaciones insesgadas de esos efectos, tenemos en cuenta los shocks acaecidos en la política nacional, las preferencias ideológicas de los ciudadanos y las características del gobierno, y estimamos la ecuación de votación utilizando variables instrumentales. Consideramos, también, varias características del gobierno (ideología, gobierno de coalición y gobierno en su primer mandato) para mediar los efectos de los impuestos sobre el voto. La ecuación de votación fue estimada utilizando una base de datos de cerca de 3.000 municipios españoles y el análisis de tres elecciones locales (1995, 1999 y 2003). Los resultados sugieren que los incrementos en el impuesto sobre la propiedad, tanto a nivel del municipio como de aquellos circundantes, tienen un impacto nada despreciable sobre los votos obtenidos por el partido en el gobierno, y que tal impacto es especialmente elevado cuando el gobierno es de derechas, forma una coalición y no está en su primer mandato.Palabras clave: Competencia referencial, votación, gobierno local, impuestos Clasificación JEL: H71; H73 a Comments are welcome. The opinions expressed in the paper do not necessarily reflect the IEB's opinions.