Regensburg 2016 – wissenschaftliches Programm

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SOE: Fachverband Physik sozio-ökonomischer Systeme

SOE 4: Traffic, Urban and Regional Systems

SOE 4.2: Vortrag

Montag, 7. März 2016, 11:45–12:00, H36

Risk modeling in Spanish indebted municipalities using Generalized Power Law distributions — •Faustino Prieto and José María Sarabia — University of Cantabria, Department of Economics, Santander, Spain.

In this paper, we studied how the debt is distributed across municipalities in Spain. These local entities are financied by the central state, by the autonomous community to which they belong, and by their local revenues. Their expenditure are directed at providing essential local services to people in their local area as, for example, street cleaning, local police, etc. For different reasons, they decide to contract debt. In that context, the aim of this study was to find an adecuate probabilistic model for that debt. First, we found that the Power Law model was only adecuated in the upper tail of the distribution, which means that only the most indebted local entities followed a power law behaviour. Then, for all the Spanish indebted municipalities dataset, in the period 2008-2014, we fitted different probabilistic models by máximum likelihood, compared them by the Bayesian Information criterion, and found that a new Generalized Power Law (GPL) distribution provided the better fit. Finally, we tested the goodness-of-fit of that new GPL model by a Kolmogorov-Smirnov test method based on bootstrap resampling. We found that the new GPL distribution can be an adequate framework for modeling the debt of municipalities.