search query: @indexterm Fiscal policy / total: 505
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| Author: | Hinnerich, B.T. |
| Title: | Do merging local governments free ride on their counterparts when facing boundary reform? |
| Journal: | Journal of Public Economics
2009 : JUN, VOL. 93:5-6, p. 721-728 |
| Index terms: | fiscal policy free riders local government Scandinavia Nordic countries Sweden |
| Freeterms: | amalgamations annexations common pool |
| Language: | eng |
| Abstract: | In the 20th century, the Western world showed a significant trend towards larger local governments. This was driven to a large extent by boundary reforms which can offer economic benefits, yet possibly giving rise to costs driven by opportunistic political behaviour. Using a Swedish compulsory reform, this study tests for such behaviour. The reform gives a local government the incentive to accumulate debt before a merger taking place, since the taxpayers in the new locality will share the cost. The strength of the incentive to free ride is determined by the population size of the initial locality relative to that of the new locality. There is found an economically large and statistically significant free riding effect. |
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