Spatial effects on local government efficiency

Abstract

Little attention has been paid to the spatial pattern of local government efficiency. This paper intends to fill this gap by conducting an empirical analysis of a sample of 246 Italian municipalities over the decade 1998–2008. Municipal government efficiency is measured in terms of the speed of payments. Estimation results reveal that municipalities mimic the speed with which public spending is carried out by their neighbours. Political yardstick competition is found to be the source of mimicking behaviour in the speed of payments.