This paper analyzes the relationship between govern-ment efficiency—an important dimension of quality ofgovernment—and economic growth at the municipallevel in 1,820 Spanish municipalities during the period2008–2015. At this level of disaggregation, the litera-ture is virtually nonexistent due to severe data con-straints. The efficiency of local government provides anaccurate indicator of how good local authorities are inmanaging their budget. This variable is expected to behighly correlated with other more traditional quality ofgovernment indicators, such as corruption. After com-puting our measure, we then use it in a growth regres-sion framework. We find a dominant positive effect ofgovernment efficiency onincome per capita growth,which is robust to a wide variety of scenarios. Ourfindings also suggest that increases in local governmentquality are particularly rewarding for the poore... [Llegir més ...]