Working Paper
Asymmetric and Non-Linear Adjustments in Local Fiscal Policy
Gabriella Deborah Legrenzi
CESifo, Munich, 2009
CESifo Working Paper No. 2550
CESifo, Munich, 2009
CESifo Working Paper No. 2550
We analyse the revenue-expenditure patterns of local governments, allowing for asymmetric and non-linear adjustments of local spending and taxation to disequilibrium errors. Our results provide evidence of a downward inflexibility of both local government spending and local taxation, pointing to a budget-maximising local government.
CESifo Category
Public Finance
Public Finance
Keywords: fiscal federalism, fly-paper effect, non-linear time-series, asymmetric adjustment
JEL Classification: C220,H100,H710