It Depends on Who You're Looking at: Neighbourhood Effects in Local Government Cultural Expenditures

Governments often see it as their responsibility to support cultural life and at times spend a significant amount of resources in the pursuit of this goal. The present paper analyses whether and how municipalities influence each other in this decision to spend resources on the arts. Specifically, we employ data on local government cultural spending 304 Flemish municipalities in 2002 to assess whether municipality’s expenditure decisions depend on that in neighbouring municipalities. The empirical analysis shows that Flemish municipalities' cultural spending is generally positively affected by that in neighbouring municipalities (indicating significant spatial interdependence in cultural policies). Interestingly, however, a more complex pattern arises for municipalities neighbouring the 13 largest Flemish cities.