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Adjusting to austerity: the public spending responses of regional governments to the budget constraint in Spain and Italy

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  • Toubeau, Simon
  • Vampa, Davide

Abstract

What are the effects of fiscal imbalances, and austerity, on regional-level spending? To answer this question, we examine an original dataset of yearly spending decisions of regional governments in Italy and Spain between 2003 and 2015. We find that the rise in regional deficits has an important negative effect on regional governments’ spending. The strength of this effect is, however, mitigated by the presence of a left-wing party in regional office. In addition, we uncover an important variation in the extent of cutbacks across policy sectors: regional governments tend to protect the health sector and focus their retrenchment efforts on social assistance and running of public institutions. Partisanship matters here too, as left-wing parties tend to protect healthcare more than their right-wing rivals. These findings bear relevance for understanding the role of partisanship and policy sector in the process of public retrenchment in multi-level states.

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  • Toubeau, Simon & Vampa, Davide, 2021. "Adjusting to austerity: the public spending responses of regional governments to the budget constraint in Spain and Italy," Journal of Public Policy, Cambridge University Press, vol. 41(3), pages 462-488, September.
    • Handle: RePEc:cup:jnlpup:v:41:y:2021:i:3:p:462-488_3
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    Cited by:

    1. Pablo Andres & Inigo Garcia-Rodriguez & M. Elena Romero-Merino & Marcos Santamaria-Mariscal, 2023. "Political directors and corporate social responsibility: Are political ideology and regional identity relevant?," Review of Managerial Science, Springer, vol. 17(1), pages 339-373, January.

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