Making Every Dollar Count: Local Government Expenditures and Welfare

The paper aims at examining the relationship between the allocations of funds at the local government level and the economic well-being of citizens. The results of this study help shed light on ways to get the best out of every dollar spent by local governments. Three empirical proxy measures for citizen well-being were used in the estimation of three different panel data models. Results suggest that some types of government expenditure can have a positive influence on citizen well-being. The analysis provides insights into how economic development policies may be conceived by local governments to ensure sustained economic prosperity of its citizens.