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This paper estimates a hedonic price model which makes it possible to determine how the price of a unit varies with the set of attributes it possesses, in the Spanish housing market. Concretely, and by means of capitalisation, hedonic price models can be used as an instrument to capture how local public expenditures influence housing prices and, by extension, how homeowners can indirectly receive benefit from local public investment. Using individual data for dwellings from the city of Barcelona (Spain) for the period 1998—2001, it is found that local policies aimed at enhancing the quality of life or the location-specific characteristic of the city of Barcelona have a positive impact on housing values.

Local governments prioritize spending on various types and levels of public services. Although scholars have shown that citizen preferences and institutional factors, such as economic, political, and legal arrangements, play a role in resource allocation, scholars have not systematically examined the impact of local elected officials' own ideological preferences on service prioritization. A better understanding of the impact of personal ideology on local government resource allocation is needed as this provision of funds has implications for democratic governance and responsiveness. We develop and use a novel measure of local elected official ideology using a 2011 survey of California local elected officials to test the hypothesis that local decision-maker ideology affects attitudes on funding-specific service categories. We find evidence that local elected officials' attitudes toward service reductions are associated with both their own individual ideology, measured on the conservative–liberal spectrum, and the ideology of their constituents.

This paper concerns amalgamation impacts on local public expenditures. The empirical analysis is based on the extensive 1952 municipal reform in Sweden. The 1952 reform amalgamated municipalities in a way that they had at least 2,000-3,500 inhabitants. This was done in the belief that larger municipalities would improve administration efficiency and public services by exploiting economies of scale. The results show that the reform had a negative impact on expenditures as long as the municipalities did not exceed a critical size. Adapted from the source document.

This thesis consists of a summary and four papers. The first two papers are theoretical contributions within the area of optimal taxation and public expenditures under asymmetric information between the government and the private sector, and the last two are empirical contributions to the literature on local public expenditures. Paper [I] concerns the optimal use of publicly provided private goods in an economy with equilibrium unemployment. The paper points out that imperfect competition in the labor market gives rise to additional policy incentives associated with the self-selection constraint, which motivates adjustments in the public provision of private goods. It also addresses employment related motives behind publicly provided private goods. Paper [II] addresses optimal income and commodity taxation in a dynamic economy, where used durable goods are subject to second-hand trade. In our framework, the government is unable to directly control second-hand transactions via commodity taxation. We show how the appearance of a second-hand market affects the use of commodity taxation on the new durable goods as well as the use of income taxation. Paper [III] relates the existence and size of the flypaper effect to observable municipal characteristics. The analysis is based on a political economy model, which implies that the effect of a change in the tax base on the majority voter's tax share will be crucial for finding a flypaper effect. The empirical part is based on Swedish data on municipal expenditures and revenues for the period 1996-2004. The results show that the size of the flypaper effect varies among municipalities depending on the relative composition of grant and tax base. In Paper [IV], the composition of municipal expenditures in Sweden is analyzed by estimating a demand system for local public services, in which tax revenue collection is treated as endogenous. The estimation is based on the QAIDS specification and uses panel data for the period 1998-2005 and for six local public services. The results show that the point estimates of the income elasticities are positive (with one exception), whereas the point estimates of the own-price elasticities are negative and less than one.

The focus of this dissertation is local government expenditure, where growth, quality, and equality is in the center of attention Essay 1: Sports and Local Growth in Sweden: Is a Sports Team Good for Local Economic Growth? The purpose of Essay 1 is to analyzethe effect of professional sports on the municipality's tax base. I find no indications of a positive effect on the growth rate of per capita income from having a team in the top series. Essay 2: Equality of Quality of Day Activity Service Programs in Sweden. In this Essay we investigates the equality of the day activity service programs for people with intellectual disabilities provided by local governments in Sweden. The findings are that despite the Act concerning Support and Service for Persons with Certain Functional Impairments intended to secure equality in living conditions, the quality of day activity service programs seems to be dependent on the local government's tax base as well as the political preferences. In Essay 3: Analysis of Cost and Quality Indicators of Day Activity Service Programs in Sweden, we analyze the distribution of observable quality indicators for daily activity service programs. We find that municipalities that conduct regular user surveys find reasons to spend more per user on average. Additionally, the probability for transitions to employment at a regular workplace is higher in municipalities where as a routine a review is made of whether each participant can be offered an internship or work. The objective of Essay 4: The Composition of Local Government Expenditure and Growth: Empirical Evidence from Sweden, is to analyze whether there is a possibility of enhancing the average income growth rate at the local level by redistributing expenditure between main functional areas of local governments, while keeping the budget restriction fixed. We find that devoting large shares of expenditure on areas that increase labor supply, such as child care are positively related to growth in income. Additionally we find that spending areas previously categorized as productive can have a non-linier relationship with growth.

The author analyses local authority expenditure decisions under the Block Grant system, that is, the grant distribution scheme that was in place in Britain from 1981 to 1990. The Block Grant system creates a piecewise-linear, and potentially nonconvex, budget constraint. As the choice of segment is endogenous—cither as a result of unobserved preference heterogeneity or as a result of random optimisation error—a demand function for local public expenditure cannot be consistently estimated by ordinary least squares (OLS). Instead, a two-error maximum likelihood (ML) estimation procedure is used. The results show a positive income effect and a negative price effect, both of high significance. The OLS estimate of the price coefficient is underestimated relative to its ML counterpart—because of spurious positive correlation between expenditure and price—but the OLS estimate of the income coefficient does not show a substantial bias. The two-error ML estimation results show significant evidence of unobserved preference heterogeneity and some weaker evidence of random optimisation error.

PurposeThis paper aims to propose a tool to assess local public expenditure effectiveness based on a framework of alignment between outputs, outcomes and impacts – the Index of Municipal Expenditure Effectiveness (IMEE). This index is composed of a set of indicators associated with the typology of local expenditure.Design/methodology/approachThe paper describes the methodological approach used in the development of the Index, considering the insights from the literature review and the opinion of a panel of experts. The indicators of outcomes and social impacts that are part of the Index are intentionally aligned with the UN Sustainable Development Goals (SDGs) as they provide an essential guide to assess public value creation in the current context. For simplicity purposes, three main components of municipal expenditure were considered, namely Education, Essential Public Services and Local Public Transportation. The Index is then illustrated through a pilot application, using data from five Portuguese municipalities.FindingsThis study argues that measuring the public expenditure effectiveness based on outcome and impact indicators can provide the data needed for local governments to better understand the effects of their activities over time, ultimately assessing their contribution to public value.Practical implicationsAssessing the impact of local spending is important to ensure the best use of public resources. Linking local public expenditures with the 2030 Agenda and the SDGs is a promising avenue to understand up to what extent the application of the public money is contributing to create public value by impacting on citizens' lives.Originality/valueThe proposed IMEE contributes to addressing a gap identified in public organizations, including local governments, regarding the lack of consideration of expenditure and outcome/impact relationships, and the use of variables to measure long term impacts.