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Public expenditure in time of crisis: are Italian policymakers choosing the right mix?

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  • Maria Jennifer Grisorio
  • Francesco Prota

Abstract

In the “austerity debate” a crucial issue is the composition of fiscal adjustment. This article provides empirical evidence on the relationship between economic crisis episodes and composition of public expenditure by examining the impact of economic crises on the share of different types of public spending in total public expenditure in the Italian regions. Our results suggest that fiscal consolidation strategies have not had growth-friendly composition.

Suggested Citation

  • Maria Jennifer Grisorio & Francesco Prota, 2016. "Public expenditure in time of crisis: are Italian policymakers choosing the right mix?," Working Papers. Collection B: Regional and sectoral economics 1602, Universidade de Vigo, GEN - Governance and Economics research Network.
  • Handle: RePEc:gov:wpregi:1602
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    File URL: http://infogen.webs.uvigo.es/WPB/WP1602.pdf
    File Function: First version, 2016
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    References listed on IDEAS

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    1. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
    2. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 121-133, July.
    3. Agnese Sacchi & Simone Salotti, 2016. "A Comprehensive Analysis of Expenditure Decentralization and of the Composition of Local Public Spending," Regional Studies, Taylor & Francis Journals, pages 93-109.
    4. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, pages 21-36.
    5. Francesca Barbiero & Zsolt Darvas, 2014. "In sickness and in health: protecting and supporting public investment in Europe," Policy Contributions 812, Bruegel.
    6. Maria Flavia Ambrosanio & Paolo Balduzzi & Massimo Bordignon, 2014. "Economic crisis and fiscal federalism in Italy," Working papers 8, Società Italiana di Economia Pubblica.
    7. Grisorio, Maria Jennifer & Prota, Francesco, 2015. "The short and the long run relationship between fiscal decentralization and public expenditure composition in Italy," Economics Letters, Elsevier, vol. 130(C), pages 113-116.
    8. Maria Jennifer Grisorio & Francesco Prota, 2015. "The Impact of Fiscal Decentralization on the Composition of Public Expenditure: Panel Data Evidence from Italy," Regional Studies, Taylor & Francis Journals, vol. 49(12), pages 1941-1956, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Economic crisis; composition of government expenditure; panel data.;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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