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Horizontal Interaction on Local Councils' Expenditures. Evidence from Italy

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Author Info
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.

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File URL: http://dea.univpm.it/quaderni/pdf/278.pdf
File Format: application/pdf
File Function: First version, 2007
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Publisher Info
Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Economia in its series Working Papers with number 278.

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Length: 29
Date of creation: Feb 2007
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Handle: RePEc:anc:wpaper:278

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Related research
Keywords: local councils partnerships local public expenditures spatial econometrics spill-overs strategic interaction yardistick competition

Find related papers by JEL classification:
C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, 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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