Strategies and consequences of local fiscal consolidation: Evidence from Germany
研究了德国大规模财政整顿项目对市政当局的影响，发现受目标地区人均财政余额净增190欧元，但小城镇因增税和削减公共服务导致人口下降、房价下跌和选举失利。
We investigate the consequences of a large-scale fiscal consolidation program for German municipalities. Identification relies on a difference-in-differences approach exploiting political discretion in the program’s assignment rule. We find that targeted jurisdictions improved their fiscal balance by EUR 190 per capita and year net of the program-induced grants. Local consolidation strategies differed significantly by population size, which we rationalize with agglomeration economies. Spending cuts and tax increases had little effect on the local economy. However, we detect declines in population levels and house prices as well as electoral backlash in smaller municipalities that disproportionally increased the property tax and cut spending on local public services.