Previous studies on electoral competition show that fiscal variables are manipulated by incumbent politicians in order to be re-elected. This phenomenon has been addressed by the literature on electoral budget cycle and, in a decentralised economy, by the literature on yardstick competition. Our...

We estimate a linear approximation of the market potential function for Europe as derived in geography and trade models. Using a spatial econometric estimation approach, border effects are identified by a differential impact of other regions purchasing power, depending on whether two regions are...

In a theoretical model local jurisdictions provide a public input an d a public consumption good financed by a tax on capital income. When deciding about tax rate and budget structure the jurisdictions will generally respond to each others fiscal choices irrespective of whether the policy is...

In this paper we contribute to the longstanding discussion on the role of knowledge to economic growth in a spatial context. We observe that in adopting the European policy strategy towards a competitive knowledge economy, The Netherlands is – as most European countries - mainly oriented...

A theoretical model describes the local choice of the tax rate on capital income. It establishes preferences and various fiscal conditions - including the tax rates of competing jurisdictions - as determinants of the tax rate. The empirical implications are tested using a large panel of...

We adopt a spatial econometric approach to estimate intra- and inter-industry productivity spillovers in total factor productivity transmitted through input-output relations in a sample of 13 OECD countries and 15 manufacturing industries. Both R&D spillovers as well as remainder,...

This paper tests the existence of strategic interactions among municipalities using a panel of Belgian local tax rates from 1985 to 2004. A special emphasis is put on the role of the language spoken in the various municipalities. Our results first confirm previous findings for Belgium suggesting...

Recent research in international economics highlights the role of interdependencies of investment decisions and sales of multinational firms. Previous work focused on and provided evidence for aggregate flows or stocks of foreign direct investment, showing that interdependence declines in...

Using the taxonomy by Anselin (2003), this paper investigates how the inclusion of spatially discounted variables on the ‘right-hand-side’ (RHS) in empirical spatial models affects the extent of spatial autocorrelation. The basic proposition is that the inclusion of inputs external to the...

Using the taxonomy by Anselin (2003), this paper investigates how the inclusion of spatially discounted variables on the ‘right-hand-side’ (RHS) in empirical spatial models affects the extent of spatial autocorrelation. The basic proposition is that the inclusion of inputs external to the...