Abstract
ABSTRACTWhat drives local government spending in Spain? A dynamic spatial panel approach. Spatial Economic Analysis. This paper extends traditional spatial spillover models of government spending by including dynamic effects and exogenous interaction effects. Using annual data for a sample of 3032 Spanish municipalities during 2000–12, we estimate a dynamic spatial Durbin panel data model to quantify the relevance of spatial spillovers and diffusion effects over time as well as the impact of a variety of spending determinants. We find that government spending at the local level is mainly explained by economic factors, while demographic factors and political factors appear to be less relevant.
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