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Interactions in Local Governments' Spending Decisions: Evidence from Portugal

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  • H�lia Costa
  • Linda Gon�alves Veiga
  • Miguel Portela

Abstract

C osta H., G on�alves Veiga L. and P ortela M. Interactions in local governments' spending decisions: evidence from Portugal, Regional Studies . This paper aims to analyse the degree of interaction between Portuguese municipalities' expenditure levels by estimating a dynamic panel model, based on jurisdictional reaction functions. The analysis is performed for all 278 Portuguese mainland municipalities from 1986 to 2006, using alternative ways to measure neighbourhood. Results indicate that local governments' spending decisions are significantly and positively influenced by the actions of neighbouring municipalities. Attempts to identify the sources of interaction allow it to be concluded that they are due to spillovers that require coordination in expenditure items and to mimicking behaviour possibly to attract households and firms.

Suggested Citation

  • H�lia Costa & Linda Gon�alves Veiga & Miguel Portela, 2015. "Interactions in Local Governments' Spending Decisions: Evidence from Portugal," Regional Studies, Taylor & Francis Journals, vol. 49(9), pages 1441-1456, September.
    • Handle: RePEc:taf:regstd:v:49:y:2015:i:9:p:1441-1456
    DOI: 10.1080/00343404.2013.835798
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    References listed on IDEAS

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    1. Kukenova, Madina & Monteiro, Jose-Antonio, 2008. "Spatial Dynamic Panel Model and System GMM: A Monte Carlo Investigation," MPRA Paper 11569, University Library of Munich, Germany, revised Nov 2008.
    2. Michela Redoano, 2007. "Fiscal Interactions Among European Countries. Does the EU Matter?," CESifo Working Paper Series 1952, CESifo.
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    6. Cuéllar Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "A composed error model decomposition and spatial analysis of local unemployment," MPRA Paper 79783, University Library of Munich, Germany.
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    20. Cordero, José Manuel & Pedraja-Chaparro, Francisco & Pisaflores, Elsa C. & Polo, Cristina, 2016. "Efficiency assessment of Portuguese municipalities using a conditional nonparametric approach," MPRA Paper 70674, University Library of Munich, Germany.
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