IDEAS home Printed from
   My bibliography  Save this article

The Italian Domestic Stability "Pact": its Perspectives and Framework Issues


  • F. Pica
  • A. Amatucci
  • S. Villani


In the current situation, the structural effects of the Italian Domestic Stability "Pact" must be carefully considered. Such effects are "pro-cyclical": they worsen deflation that, after 2008 depression, is nowadays markedly ongoing. The statistical analysis already carried out shows a clear differentiation of effects on territories. In the Centre-North of Italy, a trend to the reduction of municipalities' expenditure and to the alleviation of tax burden prevail structurally. In the South of Italy, on the contrary, it appears to prevail an opposite trend. This causes a considerable reduction of the gap between available resources (such a gap, in 1999, was equal to 30% and, in the long run, it has been gradually reducing up to 10%); this reduction, both in terms of accrual basis accounting and of cash basis accounting, is the effect of a worsening of life conditions of employees, due to considerably higher taxes; such an increase of tax burden has caused a trend increase of revenue, which since 1999 has been equal to 25.4%, in terms of accrual basis accounting, in the South of Italy, compared to 16.9% in the Centre-North of Italy. Secondly, the serious risks that such a current situation entails for the financial sustainability of the Municipalities are shown. Both in the Centre-North and in the South of Italy, in terms of accrual basis accounting, a trend to deficit creation appears - actually, in absolute value, very low. But the worrying phenomenon is the failure to cover loan amortization charges, which should be covered by the system of the Consolidated Act for Local Governments (TUEL; see, in particular, article 162, paragraph 6), in the current account of budgets.

Suggested Citation

  • F. Pica & A. Amatucci & S. Villani, 2009. "The Italian Domestic Stability "Pact": its Perspectives and Framework Issues," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3, pages 375-398.
  • Handle: RePEc:mul:jqyfkm:doi:10.1432/30711:y:2009:i:3:p:375-398

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers

    File URL:
    Download Restriction: no

    As the access to this document is restricted, you may want to search for a different version of it.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mul:jqyfkm:doi:10.1432/30711:y:2009:i:3:p:375-398. 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: (). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.