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oai:recercat.cat:2445/1195902025-12-04T21:19:19Zcom_2072_1057col_2072_478859col_2072_478917
RECERCAT author Castells, Antoni (Castells Oliveres) author Esteller Moré, Alejandro author Vilalta, Maite 2018-02-05T16:21:06Z2018-02-05T16:21:06Z2004 By means of a dynamic panel data analysis, and using a database from municipalities of the province of Barcelona (1993-99), we describe their process of fiscal adjustment to a shock in tax capacity. About 25% of the shock is internalized through an increase in tax effort, 35% through a reduction in public expenditure (mainly investment), while the rest is covered by an increase in the level of debt (i.e., the adjustment is delayed). However, this process of adjustment is very much influenced by the political situation of the municipality. Coalition and minority governments (“weak” governments) tend to delay the (unavoidable) adjustment, and 70% of their shock is covered by an increase in the level of debt, while the rest of municipalities (“strong” governments) adjust immediately. Leftist governments mostly react through increases in tax effort, while rightist governments reduce public expenditure to a greater extent. Finally, we find that municipalities are relatively reluctant to decrease taxes, that is, they react differently to a negative (28%) and a positive (26%) shock with regard to the level of tax effort. cc-by-nc-nd, (c) Castells, 2004 http://creativecommons.org/licenses/by-nc-nd/3.0/es/ info:eu-repo/semantics/openAccess Federalisme Política fiscal Economia Federalism Fiscal policy Economics Full Characterisation of the Political Economy of Fiscal Adjustment: Evidence from Spanish Municipalities info:eu-repo/semantics/workingPaper