The determinants of local government debt in Spain

Abstract

In the last few years the interest in studying aspects of public debt has increased. This paper aims to analyze the variables which best explains the municipal debt. To do this, we use a sample of Spanish municipalities bigger than 5,000 inhabitants in 2015 (according ordinary least squares). The main conclusion that has been reached is the following: the municipalities do not use collected taxes nor received transfers to reduce their level of accumulated debt. Since, as we have proven, a greater availability of tax resources generates debt.