When does inter-jurisdictional competition engender a 'race to the bottom'? A meta-regression analysis

Costa-Font, Joan, De-Albuquerque, Filipe and Doucouliagos, Hristos (2015) When does inter-jurisdictional competition engender a 'race to the bottom'? A meta-regression analysis. Economics & Politics , 27 (3). pp. 488-508. ISSN 1468-0343

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Abstract

A growing literature documents the existence of strategic political reactions to public expenditure between rival jurisdictions. These interactions can potentially create a downward expenditure spiral (‘race to the bottom’) or a rising expenditure spiral (‘race to the top’). However, in the course of identifying the existence of such interactions and ascertaining their underlying triggers, the empirical evidence has produced markedly heterogeneous findings. Most of this heterogeneity can be traced back to study design and institutional differences. This paper contributes to the literature by applying meta-regression analysis to quantify the magnitude of strategic inter-jurisdictional expenditure interactions, controlling for study and institutional characteristics. We find several robust results beyond confirming that jurisdictions do engage in strategic expenditure interactions, namely that strategic interactions: (i) are weakening over time, (ii) are stronger among municipalities than among higher levels of government, and (iii) appear to be more influenced from tax competition than yardstick competition, with capital controls and fiscal decentralization shaping the magnitude of fiscal interactions.

Item Type:	Article
Official URL:	http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information:	© 2015 John Wiley & Sons, Inc.
Library of Congress subject classification:	H Social Sciences > H Social Sciences (General) H Social Sciences > HN Social history and conditions. Social problems. Social reform
Sets:	Departments > European Institute Departments > Social Policy Research centres and groups > Centre for Economic Performance (CEP) Research centres and groups > LSE Health and Social Care
Date Deposited:	15 Jun 2015 12:09
URL:	http://eprints.lse.ac.uk/62318/

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