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The Misalignment of Fiscal Multipliers in Italian Regions

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  • Francesco Simone Lucidi

Abstract

By accounting for the structural heterogeneity between northern and southern economies, this paper estimates fiscal multipliers resulting from shocks to current public expenditure, total public revenues and public investment in Italian regions. The estimation is carried out by estimating a panel Bayesian VAR, where the structural shocks are identified by means of sign restrictions suggested by economic theory. The results shed new light on the magnitude of regional fiscal shocks and their propagation. Moreover, a misalignment of fiscal multipliers is revealed, which is possibly policy relevant for both local and central authorities.

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  • Francesco Simone Lucidi, 2021. "The Misalignment of Fiscal Multipliers in Italian Regions," Working Papers in Public Economics 204, University of Rome La Sapienza, Department of Economics and Law.
    • Handle: RePEc:sap:wpaper:wp204
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    More about this item

    Keywords

    Fiscal multipliers; Public investment; Panel VAR; Sign restrictions;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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