Local government debt in SpainSpatial effects and bugetary stability

Resumo

This doctoral thesis analyses a number of issues within the domain of local administration; issues such as local indebtedness, spatial effect on local debt and the law of financial sustainability and budgetary stability. The thesis is presented in three sections. After a brief introduction, the first section examines the indebtedness of Spanish town councils during the period 1997-2017, and the main legislative modifications introduced at both European and national level. A review of the main contributions made by the relevant literature on public debt, taken from different approaches and perspectives, is also included. The overall conclusion reached is that during the period prior to the onset of the economic crisis the level of indebtedness remained stable at different levels of Public Administration, with a clear downward trend. However, from 2008 onwards, the level of debt showed a sharp increase in growth until the Budget Stability Law of 2012 was imposed. This managed to slow down the growth of state and regional debt, thus achieving a downward trend in local debt. The second section of the thesis studies the local government debt, taking into account the presence of spatial interactions between neighbouring municipalities. For this, a sample of 527 municipalities of the Valencian Community is used and the spatial models S2SLS and Spatial lag are applied. The main results obtained show the existence of spatial autocorrelation in the outstanding debt among municipalities. The gender of the presiding mayor, subsidy index and transfers received and the average payment period are all variables which show a direct effect on outstanding debt. Furthermore, the variables index of net savings, the non-working population, local income and political strength have a direct effect on the municipality's debt and an indirect spatial effect on the debt of neighbouring municipalities. The third section aims to analyse whether the gender of the mayor and the rest of the members of the municipal council can affect compliance with the principles of budgetary stability and financial sustainability, as outlined in Organic Law 2/2012. The main results indicate that in local Spanish governments the greater presence of female mayors in local governance contributes to a better financial situation. In particular, it can be seen that a higher proportion of women working as councillors increases the probability of complying with budget stability, financial sustainability and the legal limit of indebtedness. Therefore, the Law on Effective Equality of Women and Men, which requires a minimum percentage of female participation in municipal electoral lists, favours compliance with the Budget Stability and Financial Sustainability Law.