IDEAS home Printed from https://ideas.repec.org/p/uca/ucapdv/10.html
   My bibliography  Save this paper

The Flypaper Effect: Evidence from the Italian National Health System

Author

Listed:
  • Levaggi, Rosella

    ()

  • Zanola, Roberto

    ()

Abstract

Public expenditure reduction in Italy is achieved through a revision of social security and health care programmes. In particular, public health expenditure control has been implemented through a reform that imposes more stringent budget rules at local level and a considerable reduction in the grants-in-aid from central government. The response to a decrease in categorical lump-sum grants from the central to local governments might result in an asymmetrical response to intergovernmental grants: local spending is highly responsive to increases in grants, but it is relatively insensitive to grants reduction [Stine, 1994; Gramkhar and Oates, 1996]. In our paper we have estimated this hypothesis using a sample of cross-sectional and time- observations covering the 20 Italian regions over the period 1989-1993. Two different models have been estimated based on different budget balance rules. The empirical results of our model show the existence of a standard and a super flypaper effect in both models. The introduction of the soft-budget constraint hypothesis results in a stronger effect of grants and a lower response of own resources which shows that before reducing expenditure regional governments prefer to incur some deficit.

Suggested Citation

  • Levaggi, Rosella & Zanola, Roberto, 2000. "The Flypaper Effect: Evidence from the Italian National Health System," POLIS Working Papers 10, Institute of Public Policy and Public Choice - POLIS.
  • Handle: RePEc:uca:ucapdv:10
    as

    Download full text from publisher

    File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/flypaper.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Qian, Yingyi & Roland, Gerard, 1998. "Federalism and the Soft Budget Constraint," American Economic Review, American Economic Association, vol. 88(5), pages 1143-1162, December.
    2. Goodspeed, Timothy J., 1998. "The Relationship Between State Income Taxes and Local Property Taxes: Education Finance in New Jersey," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(2), pages 219-238, June.
    3. M. Dewatripont & E. Maskin, 1995. "Credit and Efficiency in Centralized and Decentralized Economies," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 541-555.
    4. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    5. Anderton, Bob & Pesaran, Bahram & Wren-Lewis, Simon, 1992. "Imports, Output and the Demand for Manufactures," Oxford Economic Papers, Oxford University Press, vol. 44(2), pages 175-186, April.
    6. Miguel Gouveia, 1996. "The public sector and health care," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 329-349, July.
    7. Stine, William F., 1994. "Is Local Government Revenue Response to Federal Aid Symmetrical? Evidence from Pennsylvania County Governments in a Era of Retrenchment," National Tax Journal, National Tax Association, vol. 47(4), pages 799-816, December.
    8. Gamkhar, Shama & Oates, Wallace E., 1996. "Asymmetries in the Response to Increases and Decreases in Intergovernmental Grants: Some Empirical Findings," National Tax Journal, National Tax Association, vol. 49(4), pages 501-12, December.
    9. Miguel Gouveia, 1997. "Majority rule and the public provision of a private good," Public Choice, Springer, vol. 93(3), pages 221-244, December.
    10. Stine, William F., 1994. "Is Local Government Revenue Response to Federal Aid Symmetrical? Evidence From Pennsylvania County Governments in a Era of Retrenchment," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(4), pages 799-816, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    flypaper effect; health care; Italy; soft-budget constraint;

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uca:ucapdv:10. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lucia Padovani). General contact details of provider: http://polis.unipmn.it .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.