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Standard Spending Needs of Italian Municipalities


  • Rizzi Dino
  • Zanette Michele


Standard spending needs of municipalities, a crucial aspect of fiscal federalism, should be computed under some conditions: that municipalities have the same efficiency, that citizens have the same preferences, and, especially, that local governments are equal with regard to some «non structural» characteristics. The fitted values obtainable from the estimate of an expenditure function do not satisfy these conditions. Standard spending needs are better represented by conditional expected values, which are obtained by sterilizing differences in non structural determinants of municipality expenditures, like government grants. To compute spending needs we define two standard levels: an «average» standard and a «minimal» standard, which is defined as the minimum amount of resources that allows municipalities to provide a sufficient level of services. The method is applied to 2007 data of Italian municipalities.

Suggested Citation

  • Rizzi Dino & Zanette Michele, 2011. "Standard Spending Needs of Italian Municipalities," Politica economica, Società editrice il Mulino, issue 2, pages 219-254.
  • Handle: RePEc:mul:je8794:doi:10.1429/35199:y:2011:i:2:p:219-254

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    References listed on IDEAS

    1. Bruno Anastasia & Massimo Mancini & Ugo Trivellato, 2009. "(Il sostegno al reddito dei disoccupati: note sullo stato dell'arte, inerzie dell'impianto categoriale e incerti orizzonti di flexicurity (A note on italian Unemployment Compensation schemes)," ISAE Working Papers 112, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
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    More about this item


    fiscal federalism; municipal fiscal equalization; standard spending needs; H70; H72; H77.;

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures


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