, Matz Dahlberg
() and Per Tovmo
Lars-Erik Borge: Department of Economics, Postal: Norwegian University of Science and Technology, N-7491 Trondheim, Norway
Matz Dahlberg: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Per Tovmo: Department of Economics, Postal: Norwegian University of Science and Technology, N-7491 Trondheim, Norway
Abstract: The paper investigates the intertemporal spending behavior of Scandinavian local governments with particular attention to liquidity constraints imposed by balanced-budget-rules and other regulations. The main finding is that Danish local governments are more able to smooth current expenditures than their Norwegian and Swedish counterparts. Whereas the permanent-income hypothesis cannot be rejected for Denmark, it is in most cases rejected for Norway and Sweden. The Swedish system of market-based control and the Norwegian system of administrative control seem to produce similar results in terms of consumption smoothing.
19 pages, April 9, 2001
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