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Revisiting the fiscal drivers of subnational borrowing: a comparative analysis of Italian regions and the American states

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  • Chiara Oldani

    (University of Viterbo “La Tuscia”, Department of Economics and Engineering)

  • Temirlan Moldogaziev

    (Indiana University, O’Neill School of Public and Environmental Affairs)

Abstract

Existing literature suggests that subnational level borrowing is contingent on revenue structure and fiscal balance factors. At the same time, contexts play a role, whereby debt burdens of subnational governments may be higher or lower depending on fiscal institutions or market structure. Comparative evidence on how contexts shape subnational borrowing, however, is lacking. To this end, we revisit how fiscal factors relate to subnational government borrowing from a comparative perspective using two distinct cases, based on data from the Italian regions and American states in 2008–2018. Bayesian analyses of panel data show that the revenue burden in both Italy and the U.S., marginally, matters for long-term borrowing, but not for short-term debt. Fiscal balance is a significant covariate of long- and short-term subnational borrowing levels in both countries. The proportion of tax revenues relative to total revenues is significant only for short-term debt and only in the sample of American states.

Suggested Citation

  • Chiara Oldani & Temirlan Moldogaziev, 2025. "Revisiting the fiscal drivers of subnational borrowing: a comparative analysis of Italian regions and the American states," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 15(4), pages 1069-1097, December.
    • Handle: RePEc:spr:eurase:v:15:y:2025:i:4:d:10.1007_s40822-025-00325-y
    DOI: 10.1007/s40822-025-00325-y
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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