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The origins of the public debt of Italy: Geographically dispersed interests?


  • Buiatti, Cesare
  • Carmeci, Gaetano
  • Mauro, Luciano


In this paper we reconstruct the macro regional government deficits of Italy and find that the aggregate deficit resulting from our estimates captures quite well the entire dynamics of the Italian national public deficit. This new data set shows that the ultimate cause of the accumulation of public debt of Italy lies in the extraordinary fiscal imbalance of the Southern regions. The new data allow us to test empirically a simple Common Pool model, augmented by a variable measuring the political influence of each macro region in the Government, to verify the existence of a geographically dispersed interests issue for the Italian case. Our measure of political influence turns out to significantly explain the regions’ deficits also when controlling for population and income gaps. In addition, using a J-test approach, we find that including the predictions of the Common Pool–Pork Barrel regional model into a general model of the Italian national deficit turns out to greatly increase its explanatory power. The results call for deep institutional reforms of the fiscal decentralization so far implemented in Italy.

Suggested Citation

  • Buiatti, Cesare & Carmeci, Gaetano & Mauro, Luciano, 2014. "The origins of the public debt of Italy: Geographically dispersed interests?," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 43-62.
  • Handle: RePEc:eee:jpolmo:v:36:y:2014:i:1:p:43-62 DOI: 10.1016/j.jpolmod.2013.10.016

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    References listed on IDEAS

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    Cited by:

    1. Leno S. Rocha & Frederico S. A. Rocha & Th'arsis T. P. Souza, 2016. "Is the public sector of your country a diffusion borrower? Empirical evidence from Brazil," Papers 1604.07782,
    2. Giannola, Adriano & Petraglia, Carmelo & Scalera, Domenico, 2016. "Net fiscal flows and interregional redistribution in Italy: A long-run perspective (1951–2010)," Structural Change and Economic Dynamics, Elsevier, vol. 39(C), pages 1-16.
    3. Mitze, Timo & Matz, Florian, 2015. "Public debt and growth in German federal states: What can Europe learn?," Journal of Policy Modeling, Elsevier, vol. 37(2), pages 208-228.
    4. Gordon L. Brady & Cosimo Magazzino, 2017. "The Sustainability of Italian Public Debt and Deficit," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 23(1), pages 9-20, February.

    More about this item


    Italian public deficit; Italian public debt; Common Pool; Pork Barrel; Geographically dispersed interests;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General


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