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With increasing fiscal decentralization and the growth in GDP per capital around the world, local government expenditures have been on a rise. This study examines the financial efficiency of Gyeonggi Province’s municipal currency through a 2-stage network data envelopment analysis (DEA) using the 31 municipalities as the decision-making units (DMUs). Then, the authors identify environmental variables that affect efficiency of the municipal currency through a Tobit regression and discuss the policy implications of these findings to provide helpful insight for decision-makers in establishing future policies on municipal currencies.

Measuring Local Economy Efficiency With Two-Stage Bootstrap DEA: Evidence From Municipal Currency in South Korea