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...he consequence of the local tax policy on real property. This might triggersdynamics in local political economy which will induce adjustments in official land valuationssand real property tax rates. (=-=OATES, 1972-=-; WILDASIN, 2006)sBoth the factor price equalization hypothesis and the theory of interjurisdictional fiscalscompetition indicate that divergences in land prices may signal inefficient land use. Where...

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...te goods - when she submits herself for re-election.s11sOur model builds on the literature concerning rents-motivated political agents andselectoral accountability (e.g., Barro, 1973; Ferejohn, 1986; =-=Rogoff, 1990-=-; Persson, Roland andsTabellini, 1997), and term limits and yardstick competition (e.g., Besley and Case, 1995a,s1995b). However, it is adapted to the Philippine setting and builds on the insights of ...

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...insurance, poor,sPhilippinessJEL Codes: H72, I18, H4s3s1. INTRODUCTIONsFor decentralization to work, it has been emphasized that local authorities must be heldsaccountable (e.g., Bardhan, 2002; World =-=Bank, 2004-=-). The argument is that accountable localsofficials internalize the objectives of their constituents or service clients in their exercise of widerspowers and use of more resources under decentralizati...

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...ces of immobile factors of production willstend to equalize across borders provided there is free trade of final goods and the trading areasshave access to the same (linearly homogeneous) technology (=-=DIXIT and NORMAN, 1980-=-;sJONES and NEARY, 1984). The reason is that trade is driven by comparative cost advantages,swhich in turn also depend on the relative abundance and productivity of the fixed factors. As itswere, the ...

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...but necessary fiscal decisions; but can lead as well an incumbent in her final term to abuse hersposition since she is unlikely to reap the future rewards for good behaviour (Johnson and Crain,s2004; =-=Besley and Case, 1995-=-a; Escaleras and Calcagno, 2009). Therefore, term limits could havesambiguous effects on fiscal decisions.s4sIn contrast, yardstick competition, which in this case is interpreted as the comparison ofs...

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...but necessary fiscal decisions; but can lead as well an incumbent in her final term to abuse hersposition since she is unlikely to reap the future rewards for good behaviour (Johnson and Crain,s2004; =-=Besley and Case, 1995-=-a; Escaleras and Calcagno, 2009). Therefore, term limits could havesambiguous effects on fiscal decisions.s4sIn contrast, yardstick competition, which in this case is interpreted as the comparison ofs...

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... competition, health insurance, poor,sPhilippinessJEL Codes: H72, I18, H4s3s1. INTRODUCTIONsFor decentralization to work, it has been emphasized that local authorities must be heldsaccountable (e.g., =-=Bardhan, 2002-=-; World Bank, 2004). The argument is that accountable localsofficials internalize the objectives of their constituents or service clients in their exercise of widerspowers and use of more resources un...

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...lyfinanced private goods - when she submits herself for re-election.s11sOur model builds on the literature concerning rents-motivated political agents andselectoral accountability (e.g., Barro, 1973; =-=Ferejohn, 1986-=-; Rogoff, 1990; Persson, Roland andsTabellini, 1997), and term limits and yardstick competition (e.g., Besley and Case, 1995a,s1995b). However, it is adapted to the Philippine setting and builds on th...

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...ndra, 2004). If they are not answerable for their actions, local governments become moressusceptible to elite capture or interest groups, at the expense of the larger constituency includingsthe poor (=-=Reinikka and Svensson, 2004-=-; Bardhan and Mookherjee, 2000). To make local officialssmore responsible, various mechanisms have been proposed including better electoral institutions,sfinancial transparency, democratic participati...

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... measures of spatial autocorrelation aresused, namely: the global Moran I statistic and the local Moran Ii statistic. Both statistics havesbeen employed to trace spatial patterns in household demand (=-=CASE, 1991-=-), international pricess(ATEN, 1996), local unemployment rates (PATACCHINI and ZENOU, 2007) and clustering ofsindustries (CHAKRAVORTY, KOO and LALL, 2003). Following UPTON and FINGLETONs(1985) and CHE...

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...answerable for their actions, local governments become moressusceptible to elite capture or interest groups, at the expense of the larger constituency includingsthe poor (Reinikka and Svensson, 2004; =-=Bardhan and Mookherjee, 2000-=-). To make local officialssmore responsible, various mechanisms have been proposed including better electoral institutions,sfinancial transparency, democratic participation in local fiscal affairs, us...

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...n in local fiscal affairs, use of performance orsgovernance indices, Citizen's Report Cards and satisfaction surveys, and media exposé (Blair,s2000; Devas and Grant, 2003; Paul, 1998; Ravindra, 2004; =-=Reinikka and Svensson, 2003-=-).sIn this paper we investigate the effects of two measures, namely term limits and yardstickscompetition, that can potentially constrain local authorities from misusing their greater powersand privil...

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...of production willstend to equalize across borders provided there is free trade of final goods and the trading areasshave access to the same (linearly homogeneous) technology (DIXIT and NORMAN, 1980;s=-=JONES and NEARY, 1984-=-). The reason is that trade is driven by comparative cost advantages,swhich in turn also depend on the relative abundance and productivity of the fixed factors. As itswere, the prices of the traded go...

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...r service clients in their exercise of widerspowers and use of more resources under decentralization. Indeed where local governments aresaccountable, local provision of public services have improved (=-=Deininger and Mpuga, 2005-=-;sRavindra, 2004). If they are not answerable for their actions, local governments become moressusceptible to elite capture or interest groups, at the expense of the larger constituency includingsthe ...

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...ies, then the devolution of some social healthsinsurance functions to local governments could work, counter to the critiques against healthsdecentralization (e.g., Akin, Hutchinson and Strumpf, 2005; =-=Homedes and Ugalde, 2005-=-). Theskey insight here is that the decentralization of this particular function works because healthsinsurance is largely redistributive and essentially a private good, which serves the incumbent'sso...

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...ign for the coefficient of real income per capitasin both H and G equations. That health insurance is a normal good, at least for households, isswell documented (Levy and DeLeire, 2003; Thomas, 1995; =-=Bundorf and Pauly, 2006-=-). Wesassume that LGUs will behave in a similar manner with respect to demand for health insurance.sOn the other hand, LGU expenditures on public goods have been found, in many countries, to bespositi...

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...ncy, democratic participation in local fiscal affairs, use of performance orsgovernance indices, Citizen's Report Cards and satisfaction surveys, and media exposé (Blair,s2000; Devas and Grant, 2003; =-=Paul, 1998-=-; Ravindra, 2004; Reinikka and Svensson, 2003).sIn this paper we investigate the effects of two measures, namely term limits and yardstickscompetition, that can potentially constrain local authorities...

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...ns,sfinancial transparency, democratic participation in local fiscal affairs, use of performance orsgovernance indices, Citizen's Report Cards and satisfaction surveys, and media exposé (Blair,s2000; =-=Devas and Grant, 2003-=-; Paul, 1998; Ravindra, 2004; Reinikka and Svensson, 2003).sIn this paper we investigate the effects of two measures, namely term limits and yardstickscompetition, that can potentially constrain local...

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...exercise of widerspowers and use of more resources under decentralization. Indeed where local governments aresaccountable, local provision of public services have improved (Deininger and Mpuga, 2005;s=-=Ravindra, 2004-=-). If they are not answerable for their actions, local governments become moressusceptible to elite capture or interest groups, at the expense of the larger constituency includingsthe poor (Reinikka a...

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...rscore factors that enable of many local politicians toscontinually hold power such as patronage and feudal relations, fear (bossism) and electoral fraud,sand membership in political dynasties (e.g., =-=Lande, 1965-=-; Gutierrez, 1994; Lacaba, 1995; Sidel,s1997; Rivera, 1999; Coronel et al., 2004; de Dios, 2007; Solon, Fabella and Capuno, 2009).sTo fix ideas, consider an incumbent that makes a fiscal decision in t...

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...d power such as patronage and feudal relations, fear (bossism) and electoral fraud,sand membership in political dynasties (e.g., Lande, 1965; Gutierrez, 1994; Lacaba, 1995; Sidel,s1997; Rivera, 1999; =-=Coronel et al., 2004-=-; de Dios, 2007; Solon, Fabella and Capuno, 2009).sTo fix ideas, consider an incumbent that makes a fiscal decision in the first period tosimprove her chances of getting re-elected for another term, w...

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... goods implying an expected positive sign for the coefficient of real income per capitasin both H and G equations. That health insurance is a normal good, at least for households, isswell documented (=-=Levy and DeLeire, 2003-=-; Thomas, 1995; Bundorf and Pauly, 2006). Wesassume that LGUs will behave in a similar manner with respect to demand for health insurance.sOn the other hand, LGU expenditures on public goods have been...

Citation Context

...e of the local tax policy on real property. This might triggersdynamics in local political economy which will induce adjustments in official land valuationssand real property tax rates. (OATES, 1972; =-=WILDASIN, 2006-=-)sBoth the factor price equalization hypothesis and the theory of interjurisdictional fiscalscompetition indicate that divergences in land prices may signal inefficient land use. Where landsis underva...

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...Because of the comparison with their peers, localsauthorities are forced to "compete" to the benefit of their respective constituents. With yardstickscompetition, local public provision has improved (=-=Revelli and Tovmo, 2007-=-; World Bank, 2005).sWe apply these insights to identify the factors that influence fiscal decisions ofsmunicipal and city governments in the Philippines. Local governments have enjoyed greatersfiscal...

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...ted positive sign for the coefficient of real income per capitasin both H and G equations. That health insurance is a normal good, at least for households, isswell documented (Levy and DeLeire, 2003; =-=Thomas, 1995-=-; Bundorf and Pauly, 2006). Wesassume that LGUs will behave in a similar manner with respect to demand for health insurance.sOn the other hand, LGU expenditures on public goods have been found, in man...

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...statistic and the local Moran Ii statistic. Both statistics havesbeen employed to trace spatial patterns in household demand (CASE, 1991), international pricess(ATEN, 1996), local unemployment rates (=-=PATACCHINI and ZENOU, 2007-=-) and clustering ofsindustries (CHAKRAVORTY, KOO and LALL, 2003). Following UPTON and FINGLETONs(1985) and CHEN and GETIS (2008), let the value at the ith location be denoted by xi and let Wijsbe a me...

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...mance are now tracked usingsseveral indicators and awards systems; and elected local officials are constrained to run for thessame office after three consecutive terms. (Guevara, 2000; Manasan, 2007; =-=Capuno, 2007-=-)sThe relative performances of the local governments in the provision of local publicsservice, including the extension of insurance coverage and provision of devolved health services,svary widely in t...

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...n aresused, namely: the global Moran I statistic and the local Moran Ii statistic. Both statistics havesbeen employed to trace spatial patterns in household demand (CASE, 1991), international pricess(=-=ATEN, 1996-=-), local unemployment rates (PATACCHINI and ZENOU, 2007) and clustering ofsindustries (CHAKRAVORTY, KOO and LALL, 2003). Following UPTON and FINGLETONs(1985) and CHEN and GETIS (2008), let the value a...

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...l household surveys that are not representative at the sub-regional levels. In thesPhilippines, for example, while previous studies find divergence in regional output per capitas(PERNIA et al., 1983, =-=MANASAN, 2003-=-) or conditional convergence in household incomessacross provinces (BALISACAN and FUWA, 2004), their findings bear more on nationalsgovernment policies than on local government policies. But since rea...

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...n; their performance are now tracked usingsseveral indicators and awards systems; and elected local officials are constrained to run for thessame office after three consecutive terms. (Guevara, 2000; =-=Manasan, 2007-=-; Capuno, 2007)sThe relative performances of the local governments in the provision of local publicsservice, including the extension of insurance coverage and provision of devolved health services,sva...

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...indicators orsnational household surveys that are not representative at the sub-regional levels. In thesPhilippines, for example, while previous studies find divergence in regional output per capitas(=-=PERNIA et al., 1983-=-, MANASAN, 2003) or conditional convergence in household incomessacross provinces (BALISACAN and FUWA, 2004), their findings bear more on nationalsgovernment policies than on local government policies...

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...th and education; their performance are now tracked usingsseveral indicators and awards systems; and elected local officials are constrained to run for thessame office after three consecutive terms. (=-=Guevara, 2000-=-; Manasan, 2007; Capuno, 2007)sThe relative performances of the local governments in the provision of local publicsservice, including the extension of insurance coverage and provision of devolved heal...

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...ision of local publicsservice, including the extension of insurance coverage and provision of devolved health services,svary widely in the twenty years of decentralization (1991-2010) (Manasan, 2007; =-=Silva, 2005-=-;sWorld Bank, 2011).sA few local governments like Marikina City, Naga City and Bulacansprovince lead others in innovative services (Galing Pook Foundation, 2006). Some rich LGUsslike Makati City and D...

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...esPhilippines, for example, while previous studies find divergence in regional output per capitas(PERNIA et al., 1983, MANASAN, 2003) or conditional convergence in household incomessacross provinces (=-=BALISACAN and FUWA, 2004-=-), their findings bear more on nationalsgovernment policies than on local government policies. But since real property taxation is oftensdevolved to local governments in decentralized countries, then ...

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...many local politicians toscontinually hold power such as patronage and feudal relations, fear (bossism) and electoral fraud,sand membership in political dynasties (e.g., Lande, 1965; Gutierrez, 1994; =-=Lacaba, 1995-=-; Sidel,s1997; Rivera, 1999; Coronel et al., 2004; de Dios, 2007; Solon, Fabella and Capuno, 2009).sTo fix ideas, consider an incumbent that makes a fiscal decision in the first period tosimprove her ...

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...ound that regional growth to be sensitive to trade, migration, andsinvestments. In particular, economic performance is found weak in Philippine regions with poorsroad, seaport and airport facilities (=-=LLANTO, 2007-=-).sBut in regions where such infrastructuressare adequate, investments are attracted and growth is higher (PERNIA and SALAS, 2005). Also,sregions experience more rapid growth if they trade interntiona...

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...isions; but can lead as well an incumbent in her final term to abuse hersposition since she is unlikely to reap the future rewards for good behaviour (Johnson and Crain,s2004; Besley and Case, 1995a; =-=Escaleras and Calcagno, 2009-=-). Therefore, term limits could havesambiguous effects on fiscal decisions.s4sIn contrast, yardstick competition, which in this case is interpreted as the comparison ofsrelative performance among poli...

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...ontinually hold power such as patronage and feudal relations, fear (bossism) and electoral fraud,sand membership in political dynasties (e.g., Lande, 1965; Gutierrez, 1994; Lacaba, 1995; Sidel,s1997; =-=Rivera, 1999-=-; Coronel et al., 2004; de Dios, 2007; Solon, Fabella and Capuno, 2009).sTo fix ideas, consider an incumbent that makes a fiscal decision in the first period tosimprove her chances of getting re-elect...

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...found weak in Philippine regions with poorsroad, seaport and airport facilities (LLANTO, 2007).sBut in regions where such infrastructuressare adequate, investments are attracted and growth is higher (=-=PERNIA and SALAS, 2005-=-). Also,sregions experience more rapid growth if they trade interntionally (PERNIA and QUISING,s2003). Arguably, the same improvements in welfare will result from interregional trade.sHowever, the ava...

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...s that enable of many local politicians toscontinually hold power such as patronage and feudal relations, fear (bossism) and electoral fraud,sand membership in political dynasties (e.g., Lande, 1965; =-=Gutierrez, 1994-=-; Lacaba, 1995; Sidel,s1997; Rivera, 1999; Coronel et al., 2004; de Dios, 2007; Solon, Fabella and Capuno, 2009).sTo fix ideas, consider an incumbent that makes a fiscal decision in the first period t...