Decentralization and the Composition of Public Expenditure in Spain

Abstract

This paper examines the e¤ects that …scal decentralization may have on the economic distribution of public expenditures. The estimation run is based on a model in which the utility of the representative agent from the current public expenditure depends on the distance to the level of the administration that provides it. That would be the cause why decentralized economies could experience a higher the share of current expenditure in the budget of the public administrations, in contrast to public capital. Using data from the seventeen spanish regions (1984)(1985)(1986)(1987)(1988)(1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003) we test the hypothesis and we show that …scal decentralization is a crutial determinant of the share of the public budget devoted to capital.

Fiscal decentralization and public R&D policy: a cross-country analysis

“…We consider that all variables that affect government budget contemporaneously, following the specification in different empirical papers (Alegre, 2010;Ashworth et al, 2009;Busemeyer, 2007;Fiva, 2005;Granado et al, 2005). In addition, as governments may face non-neglectable adjustment costs on budget composition, we introduce lagged versions of the dependent variables as explanatory ones to account for path dependency.…”

“…Almost all empirical studies in our literature review acknowledged that unobservable country features affect the composition of government spending, which may lead to inconsistent estimates. Following this literature, we expect endogeneity arising from differences in countries' development levels and other factors, and therefore we estimate the parameters of interest of Equation 14 using two-step system-GMM (Arellano & Bond, 1991;Arellano & Bover, 1995;Blundell & Bond, 1998), considered the 'workhorse in estimating dynamic panel data' (Kappeler & Välilä, 2008) and used in different studies (Alegre, 2010;Jia et al, 2014;Sacchi & Salotti, 2016).…”

Does Competition Affect Local Public Investment in Polish Cities?

“…Z drugiej strony, Rodriguez-Pose i in. [2009] porównując doświadczenia USA, Hiszpanii, Niemiec, Indii i Meksyku; Grisorio i Prota [2015] koncentrując się na doświadczeniach Włochy oraz Alegre [2010], odnosząc się do Hiszpanii, wskazują, że wzrost decentralizacji prowadzi do wyższego udziału w budżecie wydatków bieżących. Należy również podkre-ślić, że ewentualne zwiększenie wydatków inwestycyjnych w wyniku decentralizacji niekoniecznie musi być zgodne z preferencjami mieszkańców, a więc niekoniecznie musi doprowadzić do zwiększenia poziomu ich użyteczności.…”

“…m.in. Alegre [2010]; Kappeler i in. [2013]), to do zmiennych wyjaśniających włączono opóźnioną zmienną zależną.…”

Fiscal decentralisation and income inequality

“…If sub-central government administrations might be less able to attract skilled employees than the central government (Prud'homme, 1995), and if corruption at the local level is high, inequality might be tackled less effectively. Finally, spending decentralisation might affect the overall public expenditure composition (González Alegre, 2010;Sepulveda and Martinez-Vazquez, 2011), which in turn can have an effect on income inequality. For instance, Keen and Marchand (1997) argue that in the absence of coordination and under certain conditions, inter-jurisdictional tax competition may lead to an under-provision of public consumption goods, while it may lead to an oversupply of productivityenhancing public inputs to attract mobile capital.…”