The Korea Local Administration Review

The purpose of this article is to offer a comparative analysis of dynamic effects between local public expenditures and local tax expenditure on local economy. The poly-nominal distributed lag models were estimated by using panel data. The panel unit roots tests and panel cointegration tests were performed before the estimations. The result of analysis showed that the local tax expenditure have played an important role in the long-term growth of local economies as long as local public investment expenditure. But the total multiplier of the local tax expenditure was similar to that of local public current expenditure. Drawing on this analysis, it is necessary to consider such differences and similarities among local tax expenditure and local public expenditures in carrying out implement local tax expenditure budgeting system.