Quality of government and economic growth at the municipal level: Evidence from Spain

Maria Teresa Balaguer-Coll, Isabel Narbón-Perpiñá, Jesús Peiró-Palomino, Emili Tortosa-Ausina*

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

1 Citation (Scopus)

Abstract

This paper analyzes the relationship between government efficiency—an important dimension of quality of government—and economic growth at the municipal level in 1,820 Spanish municipalities during the period 2008–2015. At this level of disaggregation, the literature is virtually nonexistent due to severe data constraints. The efficiency of local government provides an accurate indicator of how good local authorities are in managing their budget. This variable is expected to be highly correlated with other more traditional quality of government indicators, such as corruption. After computing our measure, we then use it in a growth regression framework. We find a dominant positive effect of government efficiency on income per capita growth, which is robust to a wide variety of scenarios. Our findings also suggest that increases in local government quality are particularly rewarding for the poorest municipalities.

Original languageEnglish
Pages (from-to)96-124
Number of pages29
JournalJournal of regional science
Volume62
Issue number1
DOIs
Publication statusPublished - 1 Jan 2022

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