The short and the long run relationship between fiscal decentralization and public expenditure composition in Italy (original) (raw)
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Regional Studies, 2013
This article is an original contribution to the understanding of the relationship between fiscal decentralization and public expenditure composition. It studies the effects of the ongoing decentralization process in Italy on the share of different categories of public spending in total expenditure of the Italian regional administrations over the period 1996-2008. The data used allow to go beyond the usual distinction between current and capital expenditures and to present both an "economic" and a functional classification of public expenditures. Through a panel data analysis, the paper shows that the level of decentralization influences the expenditure composition.
Decentralization of public expenditure and growth in Italy: Does the composition matter?
2017
In this paper we exploit data at regional level on decentralized public expenditure provided by Conti pubblici territoriali from 1996 to 2014 and we decompose decentralized public expenditure into current and capital spending. The aim is to disentangle their specific effect on economic growth. Since literature does not provide unanimous indication about the effect of different component of expenditure on growth, we consider a generalized additive model, which is a semi-parametric estimation method that allows more flexibility than conventional estimation techniques. Our findings show a non-linear effect, that is different according to categories of expenditure. More specifically, the effect of capital expenditure is positive, while, decentralized current expenditure tends to have a negative effect on the rate of economic growth.
Constitutional reforms, fiscal decentralization and regional fiscal flows in Italy
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Implementing fiscal decentralization in Italy between crisis and austerity: Challenges ahead
Perspectives on Federalism, 2012
Since 2010 the Italian central government has embarked on a challenging program of fiscal consolidation, which is hugely affecting sub-central government finances. Subnational governments are involved in reaching general government fiscal targets through reduction in central government transfers, new fiscal rules, borrowing and expenditures limits. These restrictions risk to put the fiscal federalism reform to a standstill-despite the progress obtained in 2010 and 2011 with the approval of the implementing decrees of Law no. 42/2009. Conversely, carrying out the fiscal federalism reform in order to seek efficiency gains in the provision of public services and smoothing out intergovernmental relations may represent one of the most important structural measures to address consolidation needs.
Legislature size and government spending in Italian regions: Forecasting the effects of a reform
Public Choice, 2007
We analyze the effect of different legislature size on per capita regional expenditure in Italy. According to the theory, legislature size has an indefinite effect on government spending because logrolling and transaction costs may have canceling effects. We find a large and significantly positive effect of the number of legislators. We use these findings to forecast the effects of the increase in the number of legislators that is taking place in some regions: a 10% increase in legislature size commands on average a 12% increase in per capita regional expenditure.
Government size, decentralization and growth: empirical evidence from Italian regions
Applied Economics, 2017
The aim of this study is to empirically assess the relationship among government size, decentralization and economic growth in Italian ordinary regions. The empirical analysis, based on a panel dataset on Italian regions, provides evidence in support of the existence of an inverted U-shaped relationship between public expenditure and economic growth, that depends on the degree of fiscal decentralization. In particular, according to our estimates on the specific Italian case, the optimal degree of decentralization is around 32%, while the optimal government size value is approximately 52%.
European Journal of Political Economy, 2020
Although numerical fiscal rules may be introduced to achieve several objectives, to date the maintenance of fiscal sustainability is their predominant goal. This is particularly true at subnational level; maintaining fiscal discipline in a decentralized setting is challenging and subnational government fiscal rules are considered one of the most valid solutions to the problem. While theoretical and empirical literature has mainly focused on their effectiveness in containing subnational deficit and/or debt, little attention has been paid to the possible trade-offs and side effects of the rules on the composition of subnational expenditure. The aim of this paper is to fill this gap by exploiting the case of Italian municipalities, which have been subject for fifteen years (1999-2015) to a set of rules called Domestic Stability Pact. The Italian DSP framework-imposing rules only on municipalities above a population threshold (5,000 inhabitants)-allows us to implement a quasiexperimental technique to investigate the unintended composition effects of the rules. A difference-in-discontinuities design permits to find rigorous empirical evidence that the switching in 2007 to rules which are more binding in terms of fiscal discipline leads to a recomposition of municipal expenditure against investment spending. The analysis is then integrated by evaluating the impact of the rules on six categories of investment expenditure. Investment in human capital and infrastructure seems to be the most affected.
2010
A growing number of countries throughout the world are reconsidering the role and funct ions of the various levels of government in order to make public policies more effective in meeting the needs of citizens by firmly pursuing administrative devolution. This paper analyses regional interactions in the dynamics of capital public expenditure based on the estimates of a dynamic gravity model (Dendrinos-Sonis,1990) using a new database on Italian Regional Public Accounts (RPA) for the 1996-2007 period. This empirical model allows to analyse both horizontal (i.e., between regions) and vertical (i.e., between levels of government) dynamic relationships in order to determine whether they are mainly of a competitive or a complementary nature. The implications of these results within the wider debate on fiscal federalism currently under way in Italy are assessed in the analysis together with the evaluation of the sensitivity of the results. Formatted: Left: 2.5 cm, Right: 2.5 cm, Top: 2.5 cm