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Horizontal Interaction on Local Councils' Expenditures. Evidence from Italy

Author

Listed:
  • Barbara ERMINI

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Raffaella SANTOLINI

    (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

This paper seeks for public spending interdependence among jurisdictions within some Italian local councils. We find significant positive interaction among spending of neighboring local councils both at the level of total expenditure and also for different subcategories. However, this result applies only when spatial dependence is analyzed among geographically contiguous jurisdictions different criteria of proximity do not give rise to any substantial form of interaction among local governments. Attempts to identifying the source of this interaction seem to refuse yardstick competition hypothesis. Fiscal spill-overs among jurisdictions appear as a more plausible explanation; we also find evidence that local councils partnerships fail to effectively internalize these spill-overs. Finally, commuting affects spatial interdependence among jurisdictions.

Suggested Citation

  • Barbara ERMINI & Raffaella SANTOLINI, 2007. "Horizontal Interaction on Local Councils' Expenditures. Evidence from Italy," Working Papers 278, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:278
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    File URL: http://docs.dises.univpm.it/web/quaderni/pdf/278.pdf
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Padovano, Fabio & Petrarca, Ilaria, 2014. "Are the responsibility and yardstick competition hypotheses mutually consistent?," European Journal of Political Economy, Elsevier, vol. 34(C), pages 459-477.
    2. Raffaella Santolini, 2008. "A spatial cross‐sectional analysis of political trends in Italian municipalities," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 431-451, August.
    3. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Elena AMBROSETTI & Eralba CELA & Tineke FOKKEMA, 2011. "The Remittances Behaviour of the Second Generation in Europe: Altruism or Self-Interest?," Working Papers 368, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    5. David Bartolini & Raffaella Santolini, 2009. "Fiscal Rules and the Opportunistic Behaviour of the Incumbent Politician: Evidence from Italian Municipalities," CESifo Working Paper Series 2605, CESifo.
    6. Ugo FRATESI, 2010. "The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics," Working Papers 344, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    7. Ilaria Petrarca & Fabio Padovano, 2011. "From Taxes to Politics, from Politics to Taxes: Evidence of Yardstick Competition in the Italian Municipalities," Economics Working Paper from Condorcet Center for political Economy at CREM-CNRS 2011-01-ccr, Condorcet Center for political Economy.
    8. Lenka Šťastná, 2009. "Spatial Interdependence of Local Public Expenditures: Selected Evidence from the Czech Republic," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 3(1), pages 007-025, March.
    9. Luca RICCETTI, 2010. "Minimum Tracking Error Volatility," Working Papers 340, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    10. Lenka GREGOROVA & Martin GREGOR, 2010. "Jurisdictional Competition via Spending Composition: The Case of the Czech Republic," Regional and Urban Modeling 284100016, EcoMod.
    11. Luca RICCETTI, 2011. "A Copula-GARCH Model for Macro Asset Allocation of a Portfolio with Commodities: an Out-of-Sample Analysis," Working Papers 355, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    12. Wang, Jia, 2018. "Strategic interaction and economic development incentives policy: Evidence from U.S. States," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 249-259.

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    More about this item

    Keywords

    local councils partnerships; local public expenditures; spatial econometrics; spill-overs; strategic interaction; yardistick competition;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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