The fiscal federalism literature has grown rapidly these last ten years by improving our understanding of important issues regarding interactions between different governments. In particular, the literature has focused on externalities inherent to any decentralized governmental structures. Externalities arise whenever the existence of multi-tiered structure of government is considered, and jurisdictions choose some tax or regulation policy independently. In this case, indeed, the expenditure or tax setting decisions of a given jurisdiction may have positive or negative consequences on the fiscal choices of other governments. These externalities are called "horizontal" when interactions occur at the same government level or "vertical" if they are related to two different tiers. Most of the theoretical papers deal with "horizontal externalities" which are mainly due to both mobility and information asymmetries between voters and their representatives in a world where policymakers adopt non-cooperative behavior. However, local governments are also concerned about how their expenditures compare with those of their neighbors. The reasons for this behavior are broadly the same as for tax rates. Externalities also arise whenever information asymmetries between voters and politicians exist. In such a setting, an action chosen by a politician in one jurisdiction affects the decision of imperfectly informed voters in other jurisdictions. If voters use the quantity of public goods provided by other governments as a benchmark, increasing spending in one jurisdiction may induce neighboring politicians to do the same in order not to be signaled as bad incumbents. This informational externality may yield fiscal mimicking behavior. As far as economic efficiency is concerned, yardstick competition has beneficial effects either by encouraging revenue-maximizing Leviathans to tilt tax rates toward their efficient level, or by signaling voters the quality of their representatives. The purpose of this paper is to test the existence of strategic interactions related to public expenditures among the 10 Canadian provinces, using a dynamic panel dataset covering the period 1989-2007. We will highlight what kind of decentralized public spending (health, education, regional development) is more prone to mimic behavior. The paper is structured as follows. Section 2 briefly reviews the main empirical studies using Canadian data, emphasizing that most of them are based on cross-sectional data sets and only account for tax interactions. Section 3 presents the empirical test based on a dynamic panel data estimation (GMM) for a set of Canadian provinces between 1989-2007. The empirical framework and the econometric procedure are detailed in section 4. Results are presented in section 5. Finally, section 6 concludes.