Short run responses to fiscal shocks : evidence from Swedish municipalities

In: http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-73703

Abstract

This paper concerns the short-run effects of local fiscal shocks on municipal expenditure and revenue decisions. It also explores the hypothesis that differences in political preferences lead to differences in the way municipalities adjust to fiscal shocks. A panel data set for Swedish municipalities is used in the empirical estimation. According to the results, fiscal shocks have an impact on expenditure and loan decisions, and political preferences matter in the adjustment process. However, there are no indications that fiscal shocks affect revenue decisions.Keywords: ; Rev. version av rapport med samma titel som ingår Umeå economic studies 454. ; digitalisering@umu