Quality of government and economic growth at the municipal level: Evidence from Spain

Mª Teresa Balaguer-Coll (), Isabel Narbón-Perpiñá (), Jesús Peiró-Palomino () and Emili Tortosa-Ausina
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Mª Teresa Balaguer-Coll: Department of Accounting and Finance, Universitat Jaume I, Castellón, Spain
Isabel Narbón-Perpiñá: Department of Business, Universitat Autònoma de Barcelona, Spain
Jesús Peiró-Palomino: INTECO and Department of Economic Structure, Universitat de València, Spain

No 2020/04, Working Papers from Economics Department, Universitat Jaume I, Castellón (Spain)

Abstract: This paper analyzes the relationship between quality of government and economic growth at the municipal level in 1,820 Spanish municipalities during the period 2008–2015. At this level of dis- aggregation, the literature is virtually non-existent due to severe data constraints. To address this limitation, we proxy institutional quality with a measure of local government efficiency, which provides an accurate indicator of how good local authorities are at managing their budgets. This variable is expected to be highly correlated with other more traditional quality of government indicators such as corruption. After computing our measure, we then use it in a growth regression framework. We find a preponderant positive effect for local government quality on income per capita growth, which is robust to a wide variety of scenarios. Our findings also suggest that increases in local government quality are particularly rewarding for the poorest municipalities and in crisis times.

Keywords: economic growth; efficiency; quality of government; municipalities (search for similar items in EconPapers)
JEL-codes: D04 E02 H11 H7 O43 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2020
New Economics Papers: this item is included in nep-eur and nep-ure
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Related works:
Journal Article: Quality of government and economic growth at the municipal level: Evidence from Spain (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:jau:wpaper:2020/04

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