Abstract
This paper evaluates the impact of urban sprawl on municipal expenditures, considering all the 3,179 Spanish municipalities with more than 1,000 inhabitants in 2005. We have ascertained that there is an influence of urban sprawl on per capita spending: the higher the population density, the lower the total investment and current expenditures per capita. This result supports the claims in favour of smart growth in municipalities. Furthermore, the economic level exerts a positive influence on expenditures per capita. Concerning social factors, our data show that population yields economies of scale to a limit (the function presents a U-shape): from the point of the minimum per-capita spending, if the population keeps on growing, per-capita spending rises.