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: Measuring spatial effects in presence of institutional constraints: the case of Italian Local Health Authority expenditure

Author

Listed:
  • Vincenzo Atella

    (Department of Economics and Finance and CEIS Tor Vergata, CHP-PCOR)

  • Federico Belotti

    (CEIS Tor Vergata)

  • Domenico Depalo

    (Bank of Italy)

  • Andrea Piano Mortari

    (CEIS Tor Vergata)

Abstract

Spatial econometric models are now an established tool for measuring spillover effects between geographical entities. Unfortunately, however, when entities share common borders but are subject to different institutional frameworks, unless this is taken into account the conclusions may be misleading. In fact, under these circumstances, where institutional arrangements play a role, we should expect to find spatial effects mainly in entities within the same institutional setting, while the effect across different institutional settings should be small or nil even where the entities share a common border. In this case, factoring in only geographical proximity will produce biased estimates, due to the combination of two distinct effects. To avoid these problems, we derive a methodology that partitions the standard contiguity matrix into within-contiguity and between-contiguity matrices, allowing separate estimation of these spatial correlation coefficients and simple tests for the existence of institutional constraints. We then apply this methodology to Italian Local Health Authority expenditures, using spatial panel techniques. We find a high and significant spatial coefficient only for the within-contiguity effect, confirming the validity of our approach.

Suggested Citation

  • Vincenzo Atella & Federico Belotti & Domenico Depalo & Andrea Piano Mortari, 2014. ": Measuring spatial effects in presence of institutional constraints: the case of Italian Local Health Authority expenditure," Temi di discussione (Economic working papers) 967, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_967_14
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    9. Guccio, C. & Lisi, D., 2014. "Social interactions in inappropriate behavior for childbirth services: Theory and evidence from the Italian hospital sector," Health, Econometrics and Data Group (HEDG) Working Papers 14/28, HEDG, c/o Department of Economics, University of York.
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    11. Shun-ichiro Bessho & Yoko Ibuka, 2016. "Vaccination policy of Japanese municipalities," Keio-IES Discussion Paper Series 2016-004, Institute for Economics Studies, Keio University.
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    More about this item

    Keywords

    spatial; health expenditures; institutional setting; panel data;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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