Long‐ and Short‐Term Cost Efficiency Frontier Evaluation: Evidence from Spanish Local Governments*

Abstract

This paper analyses the efficiency of Spanish local governments using non-convex frontier methods. More specifically, it analyses the total cost inefficiency and proposes its decomposition into three additive components: short-term variable cost inefficiency; capacity utilisation of fixed inputs; and scale inefficiency. The second and third components correspond to the long-term cost efficiency notion. The proposition is applied to a sample of Spanish municipal councils (municipalities with over 2,000 inhabitants located in Catalonia, the Spanish north-eastern region). The results confirm the existence of significant cost inefficiency coefficients related to both the long and short term. Copyright 2007 Institute for Fiscal Studies.

What Determines Local Governments' Technical Efficiency? The Case of Road Maintenance

“…Balaguer-Coll et al (2007) and Gimenez and Prior (2007) In a further study, Borge et al (2008) examine how the efficiency of Norwegian local governments is related to political and budgetary institutions, fiscal capacity, and democratic participation. They construct an efficiency measure which is defined as the ratio of an aggregate output indicator and local government revenue and regress this measure on a set of explanatory variables.…”

Local Government Efficiency: Evidence from the Czech Municipalities

“…Recent evidence is available from Belgium (Vanden Eeckaut et al 1993;De Borger, Kerstens 1996;De Borger et al 1994; for Flanders, see Geys, Moesen 2009a, 2009b, Finland (Loikkanen, Susiluoto 2005), Germany (Geys et al 2010;Kalb 2010), Italy (Boetti et al 2010), Norway (Borge et al 2008), Portugal (Afonso, Fernandes 2006, and Spain (Arcelus et al 2007, Balaguer-Coll et al 2007Gimenez, Prior 2007). Out of Europe, recent studies cover, inter alia, the large U.S. cities (Grossman et al 1999;Moore et al 2005), Canadian municipalities (Pollanen 2005) as well as Australian municipalities (Worthington, Dollery 2002).…”

Some Determinants of Intermediate Local Governments' Spending Efficiency: The Case of French Départements

“…While De Borger et al (1994), Giménez and Prior (2007), and Balaguer-Coll et al (2007) find a positive impact of population on efficiency, the results of Loikkanen and Susiluoto (2006) and Loikkanen et al (2011) indicate a negative relationship between these factors. Similarly, population density is found to be positively related to efficiency in some studies (Geys et al, 2010;Loikkanen and Susiluoto, 2006), while other studies do not find significant effects (Afonso and Fernandes, 2008).…”

“…Similarly, a majority of studies find a negative impact of tourism and in-commuting on efficiency, which might be due to the additional costs of public goods provided to non-residents. In contrast, increasing urbanization and commercial activity (Loikkanen and Susiluoto, 2006;Balaguer-Coll et al, 2002;Giménez and Prior, 2007) and higher resident education levels Kerstens, 1994, Loikkanen andSusiluoto, 2006) are generally found to be positively related to efficiency. The latter are also used as indicator for citizen political participation, which is also found to positively influence efficiency (e.g.…”

“…in terms of income or purchasing power): while some studies find significant negative impact (De Borger and Kerstens, 1996;Loikkanen and Susiluoto, 2006), other authors find significant positive influence (Giménez and Prior, 2007;Afonso and Fernandes, 2008). Concerning dependence on central government transfers, most studies find a negative relationship between central government grants and efficiency (De Borger and Kerstens, 1996;Balaguer-Coll et al, 2007).…”