Local government efficiency: determinants and spatial interdependence |
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Authors: | Maria Teresa Balaguer-Coll Maria Isabel Brun-Martos Diego Prior |
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Institution: | 1. Department of Financial Economics and Accounting, Universitat Jaume I, Castellón de la Plana, Spain;2. Department of Economics and Business, Universidad Cardenal Herrera-CEU, CEU Universities, Valencia, Spain;3. Business Department, Universitat Autònoma de Barcelona, Barcelona, Spain |
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Abstract: | We analyse the determinants of local government efficiency taking into account the presence of spatial interactions among neighbouring municipalities. To do so, first we estimate an efficiency index using the robust order-m methodology in Valencian municipalities (Spain). Second, we examine the socio-economic, political and budgetary factors that might influence efficiency levels. Finally, we analyse the spatial interactions present in our data. The results of estimating a spatial autoregressive model show that government efficiency in neighbouring municipalities positively affects the local government’s own efficiency. This highlights the importance of considering spatial dependence structures in studies on efficiency in the public sector. |
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Keywords: | Local governments efficiency order-m determinants spatial interdependence Valencian municipalities |
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