This paper aims to test if there is a spatial interaction on municipal expenditures (health, education and investments) in electoral years. The test is performed using data from 1997 to 2008 as Lockwood & Migali (2009). Our results suggest that there is positive spatial interaction between municipalities belonging to the same microregion in health and education expenditures. In electoral years the average increase is potentiated in investments and education expenditures. These results point out that increasing expenditures in electoral years may occur as a fiscal response by the city to the fiscal actions made by the microregion neighborhood.
Political business cycles; spillover; yardstick competition
