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Markets and Politics |
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Benny Geys
Looking across Borders: A Test of Spatial
Policy Interdependence using Local Government Efficiency Ratings
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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. |
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