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The Impact of Fiscal Decentralization on the Composition of Public Expenditure: Panel Data Evidence from Italy

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  • Maria Jennifer Grisorio
  • Francesco Prota

Abstract

G risorio M. J. and P rota F. The impact of fiscal decentralization on the composition of public expenditure: panel data evidence from Italy, Regional Studies . This paper 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 one to go beyond the usual distinction between current and capital expenditures and to present a functional classification of public expenditures. Through a panel data analysis, the paper shows that the level of decentralization influences the composition of expenditure.

Suggested Citation

  • Maria Jennifer Grisorio & Francesco Prota, 2015. "The Impact of Fiscal Decentralization on the Composition of Public Expenditure: Panel Data Evidence from Italy," Regional Studies, Taylor & Francis Journals, vol. 49(12), pages 1941-1956, December.
    • Handle: RePEc:taf:regstd:v:49:y:2015:i:12:p:1941-1956
    DOI: 10.1080/00343404.2013.859665
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    1. Pierre-Richard Agénor, 2012. "Infrastructure, Public Education And Growth With Congestion Costs," Bulletin of Economic Research, Wiley Blackwell, vol. 64(4), pages 449-469, October.
    2. Kappeler, Andreas & Solé-Ollé, Albert & Stephan, Andreas & Välilä, Timo, 2013. "Does fiscal decentralization foster regional investment in productive infrastructure?," European Journal of Political Economy, Elsevier, vol. 31(C), pages 15-25.
    3. Valter Di Giacinto & Giacinto Micucci & Pasqualino Montanaro, 2010. "Dynamic Macroeconomic Effects of Public Capital: Evidence from Regional Italian Data," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 69(1), pages 29-66, April.
    4. Kappeler, Andreas & Solé-Ollé, Albert & Stephan, Andreas & Välilä, Timo, 2013. "Does fiscal decentralization foster regional investment in productive infrastructure?," European Journal of Political Economy, Elsevier, vol. 31(C), pages 15-25.
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    Cited by:

    1. Jinsol Park, 2022. "Fiscal Decentralization and the Composition of Local Government Expenditure: Evidence from South Korea," Public Finance Review, , vol. 50(1), pages 62-90, January.
    2. Di Wang & Zhiyuan Zhang & Ruyi Shi, 2022. "Fiscal Decentralization, Green Technology Innovation, and Regional Air Pollution in China: An Investigation from the Perspective of Intergovernmental Competition," IJERPH, MDPI, vol. 19(14), pages 1-18, July.
    3. Jianan Liu & Ni Dai & Yuan Sui & Asmatullah Yaqoubi, 2023. "A Study on the Impact of Fiscal Decentralization on Regional Green Development: A Perspective Based on the Emphasis on Sports," Sustainability, MDPI, vol. 15(16), pages 1-17, August.
    4. Francesco Simone Lucidi, 2023. "The misalignment of fiscal multipliers in Italian regions," Regional Studies, Taylor & Francis Journals, vol. 57(10), pages 2073-2086, October.
    5. International Monetary Fund, 2015. "Romania: Selected Issues," IMF Staff Country Reports 2015/080, International Monetary Fund.
    6. Grisorio, Maria Jennifer & Prota, Francesco, 2015. "The short and the long run relationship between fiscal decentralization and public expenditure composition in Italy," Economics Letters, Elsevier, vol. 130(C), pages 113-116.
    7. Floriana Cerniglia - Riccarda Longaretti - Alessandra Michelangeli, 2017. "Decentralization of public expenditure and growth in Italy: Does the composition matter?," CRANEC - Working Papers del Centro di Ricerche in Analisi economica e sviluppo economico internazionale crn1704, Università Cattolica del Sacro Cuore, Centro di Ricerche in Analisi economica e sviluppo economico internazionale (CRANEC).
    8. Dingqing Wang & Enqi Zhang & Hongwei Liao, 2022. "Does Fiscal Decentralization Affect Regional High-Quality Development by Changing Peoples’ Livelihood Expenditure Preferences: Provincial Evidence from China," Land, MDPI, vol. 11(9), pages 1-20, August.
    9. Grażyna Bukowska & Joanna Siwińska, 2016. "Czy konkurencja determinuje wielkość inwestycji gmin miejskich w Polsce?," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 6, pages 95-114.
    10. Zhuoxi Yu & Yu Wu & Zhichuan Zhu, 2023. "Fiscal Decentralization, Environmental Regulation and High-Quality Economic Development," Sustainability, MDPI, vol. 15(10), pages 1-20, May.
    11. Xiaosan Zhang & Xiaojie Hu & Fang Wu, 2022. "Fiscal Decentralization, Taxation Efforts and Corporate Green Technology Innovation in China Based on Moderating and Heterogeneity Effects," Sustainability, MDPI, vol. 14(22), pages 1-21, November.
    12. Ali, Amin Masud & Savoia, Antonio, 2023. "Decentralisation or patronage: What determines government's allocation of development spending in a unitary country? Evidence from Bangladesh," European Journal of Political Economy, Elsevier, vol. 78(C).
    13. Francesco Prota & Maria Jennifer Grisorio, 2018. "Public expenditure in time of crisis: are Italian policymakers choosing the right mix?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 337-365, August.
    14. Yuchen Song & Jingshu Ma & Shuai Guan & Yongfu Liu, 2022. "Fiscal Decentralization, Regional Innovation and Industrial Structure Distortions in China," Sustainability, MDPI, vol. 15(1), pages 1-17, December.
    15. Shaopeng Zhang & Xiaohong Wang, 2022. "Effects of Local Government Behavior on University–Enterprise Knowledge Flow: Evidence from China," Sustainability, MDPI, vol. 14(18), pages 1-16, September.
    16. Wildmer Daniel Gregori, 2018. "To what extent do fiscal spending rules affect budget composition?," Public Sector Economics, Institute of Public Finance, vol. 42(3), pages 325-345.
    17. BUNDE Aggrey Otieno, 2023. "Governance And Regional Development Disparities In Kenya," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 23(1), pages 51-72.
    18. Venturini, Fiorenza, 2020. "The unintended composition effect of the subnational government fiscal rules: The case of Italian municipalities," European Journal of Political Economy, Elsevier, vol. 63(C).
    19. Fiorenza Venturini, 2018. "The Unintended Composition Effect of the Subnational Government Fiscal Rules: The Case of Italian Municipalities," Working papers 70, Società Italiana di Economia Pubblica.
    20. Li, Sen & Qi, Tiancheng, 2023. "Fiscal decentralization, local government debt, and corporate innovation," Finance Research Letters, Elsevier, vol. 54(C).
    21. Moussé Sow & Mr. Ivohasina F Razafimahefa, 2015. "Fiscal Decentralization and the Efficiency of Public Service Delivery," IMF Working Papers 2015/059, International Monetary Fund.
    22. Raffaele Lagravinese & Paolo Liberati & Agnese Sacchi, 2016. "The growth and variability of local taxes: An application to the Italian regions," Working Papers. Collection B: Regional and sectoral economics 1601, Universidade de Vigo, GEN - Governance and Economics research Network.
    23. Cavalieri, Marina & Ferrante, Livio, 2020. "Convergence, decentralization and spatial effects: An analysis of Italian regional health outcomes," Health Policy, Elsevier, vol. 124(2), pages 164-173.
    24. Cavalieri, Marina & Ferrante, Livio, 2016. "Does fiscal decentralization improve health outcomes? Evidence from infant mortality in Italy," Social Science & Medicine, Elsevier, vol. 164(C), pages 74-88.

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