On Spatial Public Finance Empirics

Author: Revelli, Federico

Source: International Tax and Public Finance, Volume 12, Number 4, August 2005 , pp. 475-492(18)

Publisher: Springer

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Abstract:

This paper focuses on the empirical specification of theoretical models of strategic interaction that give rise to a spatial pattern in local government expenditures and revenues. It shows that estimation of a reduced form inter-jurisdictional reaction function might not by itself allow to discriminate among competing strategic interaction theories. A review of the recent empirical literature suggests that exploring in more depth the specific empirical implications of alternative theoretical models, as well as fully exploiting the institutional features of multi-tiered government structures and local electoral systems, can help identify the structural model generating the observed spatial auto-correlation in policy variables.

Keywords: fiscal externalities; expenditure spill-over; tax competition; yardstick competition

Document Type: Research article

DOI: http://dx.doi.org/10.1007/s10797-005-4199-9

Affiliations: 1: Department of Economics, University of Torino, Via Po 53, 10124, Torino, Italy, Email: federico.revelli@unito.it

Publication date: 2005-08-01