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Spatial fiscal interactions among French municipalities within inter-municipal groups

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  • Marie-Laure Breuillé
  • Julie Le Gallo

Abstract

Based on a unique data set of French municipalities and a large number of budgetary variables, we estimate the extent of spatial fiscal interaction among the 33,484 French municipalities in 2008 by accounting for inter-municipal cooperation. Using a spatial autoregressive model with inter-municipal group fixed effects, we show that spatial interactions among French municipalities are inflated by correlated effects that affect similarly municipalities that cooperate together. Removing these confounding effects leads to considerably smaller positive spatial interactions for tax decisions and even negative ones for capital expenditures. In addition, we observe a clear distinction between complementary choices on current budget items and substitutable choices on capital budget items.

Suggested Citation

  • Marie-Laure Breuillé & Julie Le Gallo, 2017. "Spatial fiscal interactions among French municipalities within inter-municipal groups," Applied Economics, Taylor & Francis Journals, vol. 49(46), pages 4617-4637, October.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:46:p:4617-4637
    DOI: 10.1080/00036846.2017.1287861
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    Cited by:

    1. Magdalena Karska & Andrzej Torój, 2018. "Strategiczne interakcje przestrzenne między decyzjami wydatkowymi gmin w Polsce w latach 2008–2014," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 53, pages 29-46.

    More about this item

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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