Looking Across Borders: A Test of Spatial Policy Interdependence Using Local Government Efficiency Ratings

WZB Markets and Politics Discussion Paper No. SP II 2006-03

25 Pages Posted: 26 Mar 2006

See all articles by Benny Geys

Benny Geys

Vrije Universiteit Brussel (VUB)

Date Written: February 2006

Abstract

Spatial patterns in (local) government taxation and spending decisions have received a lot of scholarly attention recently. Still, the focus on taxation or expenditure levels in previous studies is incomplete. In fact, (rational) individuals are likely to consider the level of spending on (or taxation for) public goods provision simultaneously with how much public goods they actually receive - thus assessing the 'price/quantity' of government policy (in relation to that of neighbouring jurisdictions) rather than concentrating on spending (or taxation) levels alone. Therefore, the present paper argues that incumbents may want their 'price/quantity' ratio to be close to that in neighbouring regions. Using Flemish local governments' efficiency ratings for the year 2000 (which relate tax revenues to the quantity of locally provided public goods), we confirm the existence of such neighbourhood effects in local government policies.

Keywords: Government efficiency, Flemish municipalities, local government, spatial interdependence

JEL Classification: D24, D60, H71, H72

Suggested Citation

Geys, Benny, Looking Across Borders: A Test of Spatial Policy Interdependence Using Local Government Efficiency Ratings (February 2006). WZB Markets and Politics Discussion Paper No. SP II 2006-03, Available at SSRN: https://ssrn.com/abstract=891969 or http://dx.doi.org/10.2139/ssrn.891969

Benny Geys (Contact Author)

Vrije Universiteit Brussel (VUB) ( email )

Pleinlaan 2
http://www.vub.ac.be/
Brussels, 1050
Belgium

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