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To what extent do fiscal spending rules affect budget composition?

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  • Wildmer Daniel Gregori

    (European Commission, Joint Research Centre (JRC), Ispra, Italy)

Abstract

The aim of this paper is to investigate the extent to which local budget composition reacts to variations in fiscal spending rules. It looks at Italian subnational governments and specific changes in the institutional framework, implementing a difference-in-discontinuities strategy. Results show that when a reduction in current spending is imposed, local authorities direct the cuts towards services. Furthermore, when an increase in capital spending is allowed, there is an increase in spending on infrastructure and local public debt.

Suggested Citation

  • Wildmer Daniel Gregori, 2018. "To what extent do fiscal spending rules affect budget composition?," Public Sector Economics, Institute of Public Finance, vol. 42(3), pages 325-345.
  • Handle: RePEc:ipf:psejou:v:42:y:2018:i:3:p:325-345
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    More about this item

    Keywords

    fiscal rules; public spending; difference-in-discontinuities; local governments;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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