Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA, and econometric approaches

Borger, Bruno De; Kerstens, Kristiaan

doi:10.1016/0166-0462(95)02127-2

Cited by 322 publications

(365 citation statements)

References 28 publications

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“…Our empirical analysis support the existence of such an (positive) incentive effect of fiscal equalisation on local jurisdictions' cost inefficiency. In the line with the findings of Silkman and Young (1982) and De Borger and Kerstens (1996) we show (using a broad panel of German municipalities) that an increase in the amount of grants received by the local governments indeed results in an increase in the cost (or technical) inefficiency in that local jurisdiction.…”

Section: Discussionsupporting

confidence: 74%

“…All these variables represent approximations of important responsibilities of the municipalities with regard to educational, infrastructural, social, economic and recreational services (see also De Borger and Kerstens, 1996;Geys, 2006). Table 4 shows that the variation of the output indicators is very high among the communities indicating that there are substantial differences with regard to the (population) size of the municipalities.…”

Section: Datamentioning

confidence: 99%

“…Silkman and Young (1982) show that the non-local proportion of total revenues (that is the proportion of intergovernmental grants) have a strong negative impact on the productive efficiency of local government's services. In a further study, De Borger and Kerstens (1996) analyse the determinants of local governments' cost efficiency in Belgium using different parametric and non-parametric estimation techniques. They also come to the conclusion that (intergovernmental) grants stimulate technical inefficiency.…”

Section: Introductionmentioning

confidence: 99%

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The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities

Kalb

2010

Economic Analysis and Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Terms of use: Documents in EconStor mayDownload this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08051.pdf Non-Technical SummaryA key issue in the theoretical and empirical literature of public finance is how intergovernmental grants influence the level of local public spending of the recipient government.Researchers have been particularly interested in whether grants from the federal government stimulate higher levels of overall spending by local governments or rather substitute for local tax revenue. The first effect is called the 'flypaper effect' following Arthur Okun's observation that 'money sticks where it hits'. In contrast, an aspect which has attracted far less attention in the flypaper literature is concerned with the question whether observed changes in expenditures are associated with analogous changes in the actual level of public goods or services or whether increases in expenditures lead (at least to some extent) to a waste of resources (or X-inefficiency) and losses in productive efficiency.Given this background the aim of this paper is to add to the existing literature by studying the causal effects of intergovernmental grants on local technical efficiency in Germany. For this purpose we use a simple bureaucracy model and introduce the possibility that the federal government is able to give (lump sum) grants to the local government as a substitute for local tax revenues. Moreover, we assume that the citizens of the local jurisdiction are susceptible to a misperception of the true tax price of the local public goods or services due to fiscal illusion. In fact, it is assumed that a higher amount of intergovernmental grants leads to an underestimation of the true tax price by the citizens and therefore to a higher demand of public output. Using this framework we analyse how a higher degree of redistribution, that is an increase in the amount of grants to the local government, affects the technical efficiency in the provision of public goods and services in this local jurisdiction. We find that a higher degree of redistribution has a negative impact on the technical efficiency in the local jurisdiction.Finally...

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Section: Discussionsupporting

confidence: 74%

Section: Datamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities

Kalb

2010

Economic Analysis and Policy

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“…De Borger et al, 1994;De Borger and Kerstens, 1996;Geys et al, 2010;Kalb, 2010a, etc. ), we collect output variables to cover as many functions under the direct control of local governments as data allows.…”

Section: Data and Model Specificationmentioning

confidence: 99%

“…On the other hand, the traditional non-parametric methods as the popular Data Envelopment Analysis (applied in De Borger et al, 1994;De Borger and Kerstens, 1996) have a deterministic nature in that they ignore measurement errors and bias in the data. The efficiency estimates might therefore infer from outlying observations, which make them less reliable.…”

Section: Introductionmentioning

confidence: 99%

Direct Democracy and Local Government Efficiency

Asatryan

Witte

2014

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. and applying a fully non-parametric approach to estimate local government overall efficiency, the analysis shows that more direct democratic activity is associated with higher government efficiency. This result suggests that more inclusive governance through direct decision-making mechanisms may induce more accountable and less inefficient governments. Direct Democracy and Local Government Efficiency

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Do political connections matter for bank efficiency in times of crisis?

Abdelsalam,

Mollah,

Tortosa‐Ausina

et al. 2024

Int. J Fin Econ

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Do political connections affect bank efficiency during crises? This study addresses this question by adopting a two‐stage approach that performs a quantile regression analysis on a unique dataset of listed banks in a region that has witnessed both financial and political crises, namely the Middle East and North Africa. Our results show that political connections are a driving force behind bank inefficiency. We find that the least efficient banks have the most significant association with political connections, thus supporting bailout theory. We also find that political connections influenced the efficiency of banks during the financial crisis, but not during the regional political crisis. Our results provide new evidence on the applicability of established political connection theories during political turmoil.

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Cost efficiency of Belgian local governments: A comparative analysis of FDH, DEA, and econometric approaches

Cited by 322 publications

References 28 publications

The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities

The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities

Direct Democracy and Local Government Efficiency

Do political connections matter for bank efficiency in times of crisis?

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