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Financing Regions and Local Governments: Problems and Perspectives

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  • Paolo Liberati

Abstract

This paper deals with how the reform regulating fiscal federalism in Italy (L. 42/2009) addresses three problems. First, how to finance additional sub-central competencies with local taxes, especially when they involve the provision of minimum or essential levels of service (e.g. health). Second, how to solve the trade-off between the need for greater efficiency and the need to equalise the lower endowment of the poorer regions. Third, whether local governments should have a direct relationship with the central government or whether the regions may successfully fund and equalise the fiscal capacity of local governments within their territories.

Suggested Citation

  • Paolo Liberati, 2011. "Financing Regions and Local Governments: Problems and Perspectives," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 1, March.
    • Handle: RePEc:rar:journl:0206
    as

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    References listed on IDEAS

    as
    1. Martin Besfamille & Ben Lockwood, 2008. "Bailouts In Federations: Is A Hard Budget Constraint Always Best?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 577-593, May.
    2. Wildasin, David E., 1997. "Externalities and bailouts : hard and soft budget constraints in intergovernmental fiscal relations," Policy Research Working Paper Series 1843, The World Bank.
    3. Salmon, Pierre, 1987. "Decentralisation as an Incentive Scheme," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 3(2), pages 24-43, Summer.
    4. Mr. Guiseppe Pisauro, 2001. "Intergovernmental Relations and Fiscal Discipline: Between Commons and Soft Budget Constraints," IMF Working Papers 2001/065, International Monetary Fund.
    5. Bird, Richard M. & Smart, Michael, 2002. "Intergovernmental Fiscal Transfers: International Lessons for Developing Countries," World Development, Elsevier, vol. 30(6), pages 899-912, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Fiscal federalism; Equalisation; Minimum standards;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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