Abstract.
Using a panel of 308 observations over the period 1989–1996, we analyse how Flemish municipalities react to budgetary shocks. We address two questions: whether governments respond differently to tax than to grant windfalls and whether responses to positive and negative shocks are symmetric. Our results confirm the recent findings on U.S. local governments that reveal asymmetric responses to positive and negative windfalls. We also find evidence of different responsiveness to tax and grant windfalls.
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Received: November 2000 / Accepted: September 2001
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ID="*" We thank Roger H. Gordon, Stanley Winer and participants of the 1998 EEA meeting in Berlin where a previous version of this paper was presented for stimulating comments.
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Heyndels, B., Van Driessche, F. How municipalities react to budgetary windfalls. Econ Gov 3, 211–226 (2002). https://doi.org/10.1007/s101010100040
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DOI: https://doi.org/10.1007/s101010100040