Local Government Efficiency in German Municipalities Authors Benny Geys Norwegian Business School, Nydalsveien 37, 0442, Oslo, Norway Friedrich Heinemann “Corporate Taxation and Public Finance” Research Unit, Zentrum für Europäische Wirtschaftsforschung, L 7, 1, 68161, Mannheim, Germany Alexander Kalb “Corporate Taxation and Public Finance” Research Unit, Zentrum für Europäische Wirtschaftsforschung, L 7, 1, 68161, Mannheim, Germany DOI: https://doi.org/10.1007/s13147-012-0191-x Keywords: Local government performance, Stochastic frontier analysis, German municipalities Abstract This article evaluates German local governments’ cost efficiency using a sample of 1,021 municipalities in the state of Baden-Württemberg for the year 2001. We thereby concentrate on overall or ‘global’ efficiency scores—rather than estimate efficiency for one particular service—and explicitly account for exogenous or non-discretionary influences. The latter not only corrects for influences possibly beyond the control of local policy-makers, but also allows some indication of the determinants of such ‘global’ efficiency. Our results indicate that there is a substantial divergence in efficiency across municipalities despite a homogeneous institutional setting. As especially smaller municipalities appear less efficient, these results support a case for policy programmes aimed at boundary reviews or more extensive inter-communal cooperation among small municipalities. Downloads Download data is not yet available. References Aigner, D.; Lovell, C. A. K.; Schmidt, P. (1977): Formulation and estimation of stochastic frontier production function models. In: Journal of Econometrics 6, 1, 21–37. Balaguer-Coll, M. T.; Prior, D.; Tortosa-Ausina, E. (2007): On the determinants of local government performance: A two-stage nonparametric approach. In: European Economic Review 51, 2, 425–451. Battese, G. E.; Coelli, T. J. 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