Voluntary intermunicipal cooperation can address inefficiencies from local government fragmentation without politically costly mergers, but trust deficits often hinder collaboration. This paper explores whether partisanship can facilitate cooperation by building trust and aligning preferences. We contribute to research on local cooperation and political alignment using data from Spanish municipal associations and a novel administrative dataset covering four decades. We examine (1) whether founding municipalities in associations are more similar in partisanship than later joiners, (2) whether alignment increases the likelihood of joining, and (3) apply a Regression Discontinuity Design to assess causal effects. We find that founding members are more alike in partisanship and other traits; aligned municipalities are 60% more likely to join an association; and our RDD confirms a causal relationship. Our findings highlight how partisan alignment can overcome coordination barriers in fragmented governance in low-trust settings but exacerbate conflict in high polarized ones.

This study explores whether the advantages of larger local governments outweigh the inefficiencies associated with consolidation. Specifically, it examines an Italian policy reform that required small municipalities to engage in inter-municipal cooperation for the provision of shared services. The analysis assesses the impact of this reform on local real estate prices, revealing a significant decline in house prices in the affected municipalities. This decrease suggests a deterioration in the quality of public goods provision. Furthermore, we find no evidence supporting alternative explanations, such as changes in taxation or housing supply, for these price fluctuations. Ultimately, the results indicate that the joint management of municipal functions may be harmful to both local governments and their residents, raising critical questions about the overall effectiveness of consolidation efforts.

The paper estimates public sector borrowing requirement (PSBR) for select Indian states. In doing so it quantifies their off-budget borrowings and examines guarantees given by them as per their fiscal responsibility legislations. To the best of our knowledge this is the first study of its kind for India and covers period from 2015-22. Seven states were selected based on their fiscal performance. It highlights the challenges in deriving estimates of components of PSBR. The study stresses on fiscal transparency which is critical to good governance and policy making and is of the view that instead of focusing on narrow definition of fiscal indicators like debt/ deficit, a broader definition encompassing activities of public sector would make fiscal policy realist and effective. It examines factors that influence PSBR for Indian states and finds it to be positively related to per capita GSDP and fiscal-deficit-to-GSDP ratio and inversely to states’ own-tax-revenue-to-total-expenditure ratio.

The study investigates how the reputation of a treasurer—based on their tenure compared to that of the mayor—affects financial outcomes in Polish local governments. It employs the Inverse Probability Weighted Regression Adjustment (IPWRA) method to analyze two groups of local governments: those where the treasurer was appointed by the incumbent mayor and those where the treasurer has held the position longer than the current mayor. The findings indicate that treasurers with a strong reputation lead to better financial results for local governments. This includes lower expenses, higher tax revenues, and reduced deficits and debt. Conversely, local governments with treasurers who have a weaker reputation tend to have higher current expenditures, lower investment expenditures, and increased debt issuance