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Cyclically adjusted local government balances

Author

Listed:
  • Eugenia Panicara

    () (Banca d'Italia)

  • Massimiliano Rigon

    () (Banca d'Italia)

  • Gian Maria Tomat

    () (Banca d'Italia)

Abstract

The paper provides an analysis of cyclically-adjusted budget balances of local governments in Italy for the period 2002-07. We find that local government balances appear to be relatively sensitive to the business cycle. In particular, a shock of 1 per cent in GDP changes their resources by approximately 0.6 billion. Within the sample period, both central and local policies concerning local government budgets had a sizeable impact on local government balances in cyclically-adjusted terms.

Suggested Citation

  • Eugenia Panicara & Massimiliano Rigon & Gian Maria Tomat, 2012. "Cyclically adjusted local government balances," Questioni di Economia e Finanza (Occasional Papers) 142, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:opques:qef_142_12
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    File URL: http://www.bancaditalia.it/pubblicazioni/qef/2012-0142/QEF_142.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    local public finance; budget sensitivity; business cycle; tax elasticity;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

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