Asymmetric and Non-Linear Adjustments in Local Fiscal Policy

We introduce possible asymmetries and non-linearities in the analysis of the taxing and spending decisions of local governments. Our empirical results evidence a down-ward inflexibility of both local government spending and taxation, pointing to a budget-maximizing local government. These asymmetries will need to be explicitly tackled in fiscal federalism reforms, in order for decentralization to positively contribute to the achievement of the European Monetary Union objectives.

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Year of publication:	2006-08
Authors:	Legrenzi, Gabriella ; Milas, Costas
Institutions:	Centre for Economic Research, School of Economics and Management Studies
Subject:	Fiscal federalism \| non-linear time series \| asymmetric adjustment \| fly-paper effect

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Extent:	application/pdf
Series:	Keele Economics Research Papers. - ISSN 1740-231X.
Type of publication:	Book / Working Paper
Notes:	An earlier version of this paper has been presented at the North American Summer Meeting of the Econometric Society, and at the annual meeting of the European Public Choice Society. We would like to thank the participants for their useful feedback. The usual disclaimer applies. The text is part of a series Keele Economics Research Papers Number KERP 2006/16 26 pages
Classification:	H10 - Structure and Scope of Government. General ; H71 - State and Local Taxation, Subsidies, and Revenue ; C22 - Time-Series Models
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005636083