Strategies and consequences of local fiscal consolidation
Evidence from Germany
Bibliographic Data
| ID | 11079166 |
|---|---|
| Authors | Melinda Fremerey (German Institute for Economic Research), Andreas Lichter (TU Dortmund University), Max Löffler (Maastricht University, corresponding author) |
| Year | 2025 |
| Volume | 149 |
| Pages | 103792 |
| Publication date | 2025-09-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Urban Economics (JOURNAL) |
| Journal identifiers | ISSN: 0094-1190 • E-ISSN: 1095-9068 |
| Publisher | Elsevier BV (PUBLISHER) |
| DOI | 10.1016/j.jue.2025.103792 |
| OpenAlex | W4412472143 |
| Language | EN |
| Citations received | 1 |
| References cited | 35 |
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
Consolidation (business · Economics · Macroeconomics · Finance · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Regional Development and Policy
Local Economic Development, Agglomeration Economies, and the Big Push
Firm Sorting and Agglomeration
Networking off Madison Avenue
Understanding the Soft Budget Constraint
GMM estimation with cross sectional dependence
Regression Discontinuity Designs in Economics
Evidence on economies of scale in local public service provision
Revisiting Event-Study Designs
Assessing the Incidence and Efficiency of a Prominent Place Based Policy
What Are Cities Worth? Land Rents, Local Productivity, and the Total Value of Amenities
The Political Costs of Austerity
The Effect of Agglomeration Size on Local Taxes
Tax base effects and fiscal externalities of local capital taxation
Does fiscal oversight matter
Do governments tax agglomeration rents
A Pure Theory of Local Expenditures
The Time for Austerity
How Large Are the Political Costs of Fiscal Austerity
The Dilemma of Fiscal Federalism
Austerity, economic vulnerability, and populism
Did Austerity Cause Brexit
Rising Government Debt
The Economics of Urban Density
Why Austerity? The Mass Politics of a Contested Policy
| Unique citing works | 1 |
|---|---|
| Citations per year | 1 |
| Citation span | 2026 - 2026 (1) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 1 |