Bailing out expectations and public health expenditure
We use a "natural experiment", the fiscal adjustment of Italy in the 1990s to meet the Maastricht criteria, to test a simple model of soft budget constraint that closely resembles the intergovernmental relationships in the Italian public health care sector. We show that the link between the ex-ante financing by the Central government and the health expenditure by regions was stronger when regional expectations of future bailing outs were presumably lower. Confirming previous research, we also prove that more fiscally autonomous regions were more financially responsible and that a political "alignment" effect was present, with "friendly" regional governments controlling more expenditure than unfriendly ones. Our results suggest that, at least in Italy, bailing out expectations by regions may be the missing variable emphasised by [Culyer A.J., 1988. Health care expenditures in Canada: Myth and reality. Canadian Tax Papers, 82] for empirical models explaining health expenditure. Our results also raise some worries about the outcome of the current decentralization process in Europe.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Janos Kornai & Eric Maskin & Gerard Roland, 2002.
"Understanding the Soft Budget Constraint,"
Economics Working Papers
0019, Institute for Advanced Study, School of Social Science.
- J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 11.
- J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
- J�nos Kornai & Eric Maskin & G�rard Roland, 2003. "Understanding the Soft Budget Constraint," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1095-1136, December.
- Pettersson-Lidbom, Per & Dahlberg, Matz, 2003. "An Empirical Approach for Evaluating Soft Budget Constraints," Working Paper Series 2003:28, Uppsala University, Department of Economics.
- R. Cellini & G. Pignataro & I. Rizzo, 1999.
"Competition and Efficiencyin health care: an analysis of the Italian case,"
354, Dipartimento Scienze Economiche, Universita' di Bologna.
- Roberto Cellini & Giacomo Pignataro & Ilde Rizzo, 2000. "Competition and Efficiency in Health Care: An Analysis of the Italian Case," International Tax and Public Finance, Springer, vol. 7(4), pages 503-519, August.
- repec:cup:cbooks:9780521587822 is not listed on IDEAS
- Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2009.
"Electoral goals and center-state transfers: A theoretical model and empirical evidence from India,"
Journal of Development Economics,
Elsevier, vol. 88(1), pages 103-119, January.
- Wiji Arulampalam & Sugato Dasgupta & Amrita Dhillon & Bhaskar Dutta, 2008. "Electoral goals and center-state transfers: A Theoretical model and empirical evidence from India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-14, Indian Statistical Institute, New Delhi, India.
- Arulampalam, Wiji & Dasgupta, Sugato & Dhillon, Amrita & Dutta, Bhaskar, 2008. "Electoral Goals and Center-State Transfers: A Theoretical Model and Empirical Evidence from India," IZA Discussion Papers 3376, Institute for the Study of Labor (IZA).
- Eric S. Maskin, 1999. "Recent Theoretical Work on the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 89(2), pages 421-425, May.
- von Hagen, Jurgen & Eichengreen, Barry, 1996. "Federalism, Fiscal Restraints, and European Monetary Union," American Economic Review, American Economic Association, vol. 86(2), pages 134-38, May.
- David E. Wildasin, 2004.
"The Institutions of Federalism: Toward an Analytical Framework,"
- Wildasin, David E., 2004. "The Institutions of Federalism: Toward an Analytical Framework," National Tax Journal, National Tax Association, vol. 57(2), pages 247-72, June.
- James H. Anderson & Georges Korsun & Peter Murrell, 1998.
"Which Enterprises (Believe They) Have Soft Budgets? Evidence on the Effects of Ownership and Decentralization in Mongolia,"
Electronic Working Papers
98-002, University of Maryland, Department of Economics.
- Anderson, James H. & Korsun, Georges & Murrell, Peter, 2000. "Which Enterprises (Believe They) Have Soft Budgets? Evidence on the Effects of Ownership and Decentralization in Mongolia," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 219-246, June.
- George France & Francesco Taroni & Andrea Donatini, 2005. "The Italian health-care system," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages S187-S202.
- Levaggi, Rosella & Zanola, Roberto, 2003. "Flypaper Effect and Sluggishness: Evidence from Regional Health Expenditure in Italy," International Tax and Public Finance, Springer, vol. 10(5), pages 535-47, September.
- Douglas Staiger & James H. Stock, 1994.
"Instrumental Variables Regression with Weak Instruments,"
NBER Technical Working Papers
0151, National Bureau of Economic Research, Inc.
- Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
- Pedro Pita Barros, 1998. "The black box of health care expenditure growth determinants," Health Economics, John Wiley & Sons, Ltd., vol. 7(6), pages 533-544.
- Karlsson, Sune & Lothgren, Mickael, 2000.
"On the power and interpretation of panel unit root tests,"
Elsevier, vol. 66(3), pages 249-255, March.
- Karlsson, Sune & Löthgren, Mickael, 1999. "On the power and interpretation of panel unit root tests," SSE/EFI Working Paper Series in Economics and Finance 299, Stockholm School of Economics.
- Margherita Giannoni & Theodore Hitiris, 2002. "The regional impact of health care expenditure: the case of Italy," Applied Economics, Taylor & Francis Journals, vol. 34(14), pages 1829-1836.
- Massimo Bordignon & Gilberto Turati, 2003. "Bailing Out Expectations and Health Expenditure in Italy," CESifo Working Paper Series 1026, CESifo Group Munich.
- Per Pettersson-Lidbom, 2010. "Dynamic Commitment and the Soft Budget Constraint: An Empirical Test," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 154-79, August.
- Margherita Giannoni & Theodore Hitiris, . "The Regional Impact of Health Care Expenditure: the Case of Italy," Discussion Papers 99/20, Department of Economics, University of York.
- Gerdtham, Ulf-G. & Lothgren, Mickael, 2000.
"On stationarity and cointegration of international health expenditure and GDP,"
Journal of Health Economics,
Elsevier, vol. 19(4), pages 461-475, July.
- Gerdtham, Ulf-G. & Löthgren, Mickael, 1998. "On stationarity and cointegration of international health expenditure and GDP," SSE/EFI Working Paper Series in Economics and Finance 232, Stockholm School of Economics, revised 29 Jan 1999.
When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:28:y:2009:i:2:p:305-321. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.