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Explaining local governments' cost efficiency: Controllable and uncontrollable factors
Abstract Efficient and effective management of public resources is essential at all levels of government. This issue has gained momentum due to the strains that affected public sector finances after the onset of the 2007/08 crisis in many countries, particularly in Europe. In this article, we evaluate the influence of environmental variables that affect local government efficiency in one European country, Spain, during the crisis years (2009–2015). To this end, and considering the possible influence of both controllable and uncontrollable factors, we use an approach that is able to analyse their impact across the conditional distribution of performance, and which controls for the (likely) existence of endogeneity among regressors. Results show an asymmetry in the determinants of performance since the role played by some variables depends largely on the conditional distribution of efficiency. Results are robust not only because of the instrumental variables quantile regression approach considered, but also due to the variety of models specified to measure municipalities' performance as well as the diversity of covariates.
Highlights The influence of environmental variables on Spanish local governments' efficiency is evaluated. Both controllable and uncontrollable factors are considered. The determinants are evaluated via instrumental variable quantile regression. Results show that results depend on the conditional distribution of efficiency. Results are robust to different models of municipalities' output.
Explaining local governments' cost efficiency: Controllable and uncontrollable factors
Abstract Efficient and effective management of public resources is essential at all levels of government. This issue has gained momentum due to the strains that affected public sector finances after the onset of the 2007/08 crisis in many countries, particularly in Europe. In this article, we evaluate the influence of environmental variables that affect local government efficiency in one European country, Spain, during the crisis years (2009–2015). To this end, and considering the possible influence of both controllable and uncontrollable factors, we use an approach that is able to analyse their impact across the conditional distribution of performance, and which controls for the (likely) existence of endogeneity among regressors. Results show an asymmetry in the determinants of performance since the role played by some variables depends largely on the conditional distribution of efficiency. Results are robust not only because of the instrumental variables quantile regression approach considered, but also due to the variety of models specified to measure municipalities' performance as well as the diversity of covariates.
Highlights The influence of environmental variables on Spanish local governments' efficiency is evaluated. Both controllable and uncontrollable factors are considered. The determinants are evaluated via instrumental variable quantile regression. Results show that results depend on the conditional distribution of efficiency. Results are robust to different models of municipalities' output.
Explaining local governments' cost efficiency: Controllable and uncontrollable factors
Narbón-Perpiñá, Isabel (author) / Arribas, Iván (author) / Balaguer-Coll, Maria Teresa (author) / Tortosa-Ausina, Emili (author)
Cities ; 100
2020-02-20
Article (Journal)
Electronic Resource
English
C14 , C21 , H70 , R15 , Efficiency , Instrumental variable , Local government , Quantile regression
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