Public Choice

, Volume 117, Issue 1–2, pp 125–161 | Cite as

Fiscal and Spending Behavior of Local Governments: Identification of Price Effects when Prices are not Observed

  • Rolf Aaberge
  • Audun Langørgen


This paper analyzes local public fiscal andspending behavior in a setting where localgovernments, represented by the dominantparty or coalition, are treated as utilitymaximizing agents. The econometricanalysis, which is based on a modifiedversion of ELES, recognizes total spendingas well as total income as endogenousvariables. Identification of the priceeffects is achieved by utilizing data onenvironmental cost factors and localtastes. The performance of the estimatedmodel is investigated by testing itsability to make out-of-sample predictionsof local government behavior.


Local Government Public Finance Total Income Cost Factor Price Effect 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Rolf Aaberge
    • 1
  • Audun Langørgen
    • 1
  1. 1.Research Department, Statistics NorwayOsloNorway

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