[enter Paper Title]An Investigation into the Intertemporal Spending Path of Local Government in Mauritius

This paper aims at examining whether local government spending is characterised by anintertemporal decision-making path. In other words, to what extent does local governmentexpenditure respond to contemporaneous changes in revenues. In this respect, the papercontributes to the existing body of literature by exploring the context of an Upper MiddleIncome country such as Mauritius while factoring the intertemporal choice in the supplyof local public goods. Moreover, the paper determines the short run and long runresponsiveness of local public expenditure to GDP through an Error Correction Modelwhich former is generated using time series data for Mauritius over the period 1987 to2017.Our findings uncover that local government spending might not necessarily bedetermined by its past values when GDP and its past values are introduced as controlvariables. Also, a long run relationship is found to exist between local governmentspending and GDP. These results suggest that public spending by local government betterresponds to contemporaneous changes in GDP thus exhibiting excess sensitivity. Forwardlooking behaviour of local agents can thus be ruled out. Lastly, local expenditure and realoutput are also found to be co-integrated or to share a long term relationship