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The misalignment of fiscal multipliers in Italian regions

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  • Francesco Simone Lucidi

Abstract

This paper estimates fiscal multipliers resulting from shocks to current public expenditure, total public revenues, and public investment in Italian regions by accounting for the structural heterogeneity between Northern and Southern economies. The estimation is carried out by estimating a Bayesian panel vector autoregression, where the structural shocks are identified using sign restrictions suggested by economic theory. The results shed new light on regional fiscal shocks’ magnitude and propagation. Moreover, a misalignment of fiscal multipliers is revealed, possibly policy relevant to local and central authorities.

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  • Francesco Simone Lucidi, 2023. "The misalignment of fiscal multipliers in Italian regions," Regional Studies, Taylor & Francis Journals, vol. 57(10), pages 2073-2086, October.
  • Handle: RePEc:taf:regstd:v:57:y:2023:i:10:p:2073-2086
    DOI: 10.1080/00343404.2022.2136648
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    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • 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
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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