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Grant legislation vs. political factors as determinants of soft budget spending behaviors. Comparison between Italian and French regions

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  • Jean-Michel Josselin

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Fabio Padovano

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Yvon Rocaboy

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper analyses intergovernmental transfers in France and Italy to assess to which extent soft budget spending behaviors result from slack in fiscal constraints or from political factors. It innovates on the previous literature, which concentrated on single countries, by adopting a comparative perspective. We estimate two separate but identical autoregressive forecasting models on French and Italian data to evaluate how rules and political factors lead the regional administrators of each country to form their expectations about the amount of transfers they will receive from the central government. This allows to proxy the transfer expectations in both countries and their role in determining soft budget spending behaviors. The estimates indicate that transfer expectations are a quantitatively important component of regional spending in both countries, regardless the different degrees of stringency of grant legislations and the type of grants and expenditures (total, current and capital) examined.

Suggested Citation

  • Jean-Michel Josselin & Fabio Padovano & Yvon Rocaboy, 2013. "Grant legislation vs. political factors as determinants of soft budget spending behaviors. Comparison between Italian and French regions," Post-Print halshs-00920780, HAL.
  • Handle: RePEc:hal:journl:halshs-00920780
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00920780
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    Cited by:

    1. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    2. Kornai, János, 2014. "Bevezetés A puha költségvetési korlát című kötethez [Introduction to the author s volume entitled Soft Budget Constraint]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 845-897.

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    More about this item

    Keywords

    Comparative analysis; Unitary states; Transfer expectations; Soft budget spending behavior; Intergovernmental relations; Local public spending; Bailing out;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • P43 - Economic Systems - - Other Economic Systems - - - Finance; Public Finance
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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