Political Business Cycles at the Municipal Level

Veiga, Linda Gonçalves; Veiga, Francisco José

doi:10.2139/ssrn.533682

Cited by 78 publications

(118 citation statements)

References 22 publications

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“…Veiga and Veiga (2007) and Baleiras and da Silva Costa (2004) provide evidence for political expenditure cycles for Portuguese municipalities, as does Kneebone and McKenzie (2001) for Canadian provinces. Dahlberg and Mörk (2011) show that elections impact on public employment using data for Sweden and Finland.…”

Section: Theory and Related Literaturementioning

confidence: 62%

Business taxes and the electoral cycle

Foremny

Riedel

2014

Journal of Public Economics

108

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The purpose of this paper is to assess whether the timing of elections affects tax policy choices. To do so, we exploit information on the German local business tax which is set autonomously by German municipalities. As the dates for local council elections vary across German states, the data allows us to disentangle effects related to the timing of elections from common trends. The findings support the notion of a political cycle in tax setting as the growth in local business tax rates is significantly reduced in the election year and the year prior to the election, while it significantly increases in the year after the election. This pattern turns out to be robust against a number of sensitivity checks.

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Section: Theory and Related Literaturementioning

confidence: 62%

Business taxes and the electoral cycle

Foremny

Riedel

2014

Journal of Public Economics

108

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“…To deal with this issue, we could introduce the time lagged municipal spending in our explanatory variables and would obtain a dynamic spatial panel a la Arellano and Bond (1991) (e.g. Veiga and Veiga, 2007;Foucault et al, 14 2008). However, as it introduces correlation with the municipal fixed effect, this time-lagged dependent variable would have to be instrumented.…”

Section: [Insert Map 1]mentioning

confidence: 99%

The Impact of Intermunicipal Cooperation on Local Public Spending

Frère¹,

Leprince²,

Paty³

2013

Urban Studies

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Abstract:The purpose of this paper is to assess the effects of inter-municipal fiscal cooperation on municipal public spending, based on the French experience. We estimate a model of municipal spending choice using panel data and spatial econometrics for municipalities over the period [1994][1995][1996][1997][1998][1999][2000][2001][2002][2003]. We provide two main results. First, inter-municipal cooperation has no significant impact on the level of municipal public spending, which suggests that cooperation does not achieve its goal of reducing municipal spending by the sharing of local responsibilities. Second, there are no spending interactions between municipalities belonging to the same inter-municipal community. This is in line with the goal assigned to cooperation in terms of internalization of spatial externalities.However, our results show that benefit spillovers remain highly significant outside inter-municipal communities, suggesting that inter-municipal communities remain too small.

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“…37 Following Devereux, Lockwood, and Redoano (2008), Foucault, Madies, and Paty (2008), Veiga and Veiga (2007) and Redoano (2007), we introduce the lagged dependent variable, E it 1 , as a right hand side in order to take into account the persistency in public expenditures:…”

Section: Econometric Frameworkmentioning

confidence: 99%

Yardstick competition in a federation: Theory and evidence from China

Caldeira

2012

China Economic Review

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While some scholars argue that …scal decentralization gave Chinese local o¢ cials strong incentives to promote local economic growth, traditional …scal federalism theories are not directly relevant to explain such an e¤ect in the particular context of China. In this paper, we explain the existence of interjurisdictional competition among Chinese local o¢ cials using a model of yardstick competition "from the top", in which the central government (and not local voters) creates a competition among local o¢ cials by rewarding or punishing them on the basis of relative economic performance. Our model predicts that, in this context, local governments are forced to care about what other incumbents are doing and that public spending settings are strategic complements. Then, by estimating a spatial lag dynamic model for a panel data of 29 Chinese provinces from 1980 to 2004, we provide empirical evidence of the existence of such public spending interactions. We propose a rigorous empirical framework which takes into account heterogeneity, simultaneity and endogeneity problems and spatial error dependence. The results are encouraging to the view that there are some strategic interactions among Chinese provinces, resulting from a yardstick competition created by the central government.JEL Classi…cation: D72, H2, H7

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Political Business Cycles at the Municipal Level

Cited by 78 publications

References 22 publications

Business taxes and the electoral cycle

Business taxes and the electoral cycle

The Impact of Intermunicipal Cooperation on Local Public Spending

Yardstick competition in a federation: Theory and evidence from China

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