Political Factors and Municipalities Debt: An empirical assessment in Portugal
DOI :
https://doi.org/10.34629/ufpe-iscal/1982-3967.2021.v15.e-021006Mots-clés :
political factors, debt, municipalities, panel dataRésumé
This paper explores the relationship between municipalities' debt, measured by debt per capita and different political factors, for the 308 Portuguese municipalities, from 2014 to 2018. This study adds to the scarce prior research about Portuguese municipalities’ debt and constitutes an original approach in the sense that these issues will be explored with more recent data, under the LFL of 2013 framework, implemented after the Local Administration Reform. We do not find evidence of an electoral cycle effect nor an ideological effect (left-wing/right-wing) on the level of debt per capita. Only the coincidence of the political parties between the Local Executive and Central Government appeared to be relevant in medium/large municipalities. New insights about the relationship between political factors and debt are pertinent, mostly when decentralization is underway, with more competencies being assigned to local governments and more financial resources being requested.
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