Decentralisation in Africa and Fiscal Competition Evidence from Benin

Remember that in the presence of strategic complements, the marginal utility of local public good increases in the level of the other local public good or in the spillover e¤ect. [...] 8 Among the 42 ethnic groups, the most prominent are the Fon and the Adjas in the south, the Baribas and the Sombas in the north and the Yorubas in the south-east. [...] 15 many e¤ects on public nances.23 PRit is a dummy variable which takes the value one if the local government i has the same political a¢ liation as the President in o¢ ce and zero otherwise, Et1 is a dummy variable, which takes the value one the year before the election and zero otherwise, Et is a dummy variable, which takes the value 1 the year of the election and zero otherwise, Et+1 is a dummy. [...] The coe¢ cient of the weighted average vector of public expenditure in the set of the other local governments remains positive and signicant at the 5% level for the neigh2 matrix but only at 10% for the ethnic matrix ethn2. [...] Indeed, the coe¢ cient of the dummy variable that indicates whether the local government has the same political a¢ liation as the President in o¢ ce is always signicant.33 In columns (9) and (10), we test the e¤ect of wealth constraints on the existence of pub- lic spending interactions by estimating equation (13) for both matrices.