Spatial Fiscal Interactions in Colombian Municipalities: Evidence from Oil Price Shocks

This study provides an empirical investigation of fiscal interactions in the context a developing country. I examine three components—budget balance, tax revenue, and public spending—to measure spatial between Colombian municipalities from 2000 to 2010. am using variables on municipalities’ general characteristics, variables, related conflict. use quasi-experimental identification strategy exploiting exogenous variation global oil price shocks that affect different degrees depending local endowments. find significant interaction taxes but no concerning budget balance total spending. suggests even though there is competition, do not mimic their neighbors decide whether offset changes by borrowing or