Aggregate local public sector investment and shocks: Norway 1946 - 1990

Local public sector investment is determined in an environment of shifting economic conditions. Investments are investigated using an intertemporal decision model allowing for tests of forward looking behaviour and adjustments to expected and unexpected shocks. The econometric analysis of the aggregate local public sector over the period 1946-1990 indicates that local and county governments are forward looking and have small adjustment costs to investment. In a full investment demand model, only unexpected changes of gross domestic product and unemployment are shown to be important in the short run. The central government has arranged stable revenue growth of the local public sector, but greater volatility in macroeconomic conditions has led to fluctuations in local public investment.

School reforms and school spending growth

The evolution of school spending is related to legislative school reforms expanding the school system. This study addresses the determination of legislative reforms and primary school spending, using data for Norway 1880-1990. Reforms are the result of growth in demand for school services and economic and political conditions conducive to reform. 10 school reforms are identified, and they are shown to be systematically related to characteristics of the political structure. School spending is analyzed both as an aspect of reform and by assuming separability between legislative reform decisions and implementation of reform. When legislative reform is treated as an independent determinant of school spending, we find that reforms drive up teacher employment and that local governments react with a cost saving strategy increasing the class size.Legislative reform, Political economy, Economics of education,