Does local council size affect land development expenditure? Quasi-experimental evidence from Japanese municipal data

Hirota, Haruaki and Yunoue, Hideo (2013): Does local council size affect land development expenditure? Quasi-experimental evidence from Japanese municipal data.

Abstract

The purpose of this paper is to evaluate a fiscal common-pool problem in a Japanese local government. Especially, we focus on the relationship between council size and land development expenditure of local government using a dataset of 13,989 municipalities in Japan from FY2001 to FY2006. We deal with an identification of causal effects by applying regression discontinuity design’s framework to address problem of endogeneity bias. Our results show that land development expenditure of small municipalities induce the fiscal common-pool problem over public projects.

• Item Type: MPRA Paper
• Language: English
• Keywords: fiscal common-pool problem; council size; government expenditure; regression discontinuity design
• Subjects: H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H77 - Intergovernmental Relations ; Federalism ; Secession; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H76 - State and Local Government: Other Expenditure Categories

References

[1] Egger, P. and Koethenbuerger, M. 2010. Government spending and legislative organization: Quasi-experimental evidence from Germany. American Economic Journal: Applied Economics 2, 4, 200-212.

[2] Hirota, H. and Yunoue, H., 2012. Local government expenditure and council size: Quasi-experimental evidence from Japan. MPRA paper 42799.

[3] Pettersson-Lidbom, P. 2012. Does the size of the legislature affect the size of government? Evidence from two natural experiments. Journal of Public Economics 96, 269-278.

[4] Weingast, B.R., Shepsle, K. A. and Johnsen, C. 1981. The political economy of benefits and costs: A neoclassical approach to distributive politics. Journal of Political Economy 89, 4, 642-664.