Title: Spillover effects in local public spending
Authors: FERRARESI MASSIMILIANOMIGALI GIUSEPPERIZZO LEONZIO
Citation: REGIONAL STUDIES
Publisher: ROUTLEDGE JOURNALS
Publication Year: 2018
JRC N°: JRC106612
ISSN: 0034-3404
URI: http://publications.jrc.ec.europa.eu/repository/handle/JRC106612
DOI: 10.1080/00343404.2017.1415429
Type: Articles in periodicals and books
Abstract: This paper investigated the fiscal interactions between Italian municipalities over the period 2001–11 and found a positive horizontal interdependence in spending decisions. The results are robust to different specifications of the spatial neighbours and are confirmed by a natural experiment (an earthquake in the Abruzzo region of Italy in 2009) that creates an exogenous variation in the neighbours’ spending. Furthermore, there is no evidence of yardstick competition when one considers political effects, while a negative relationship is found between spatial interaction and the size of the municipality. Thus, it can be concluded that spillover effects drive the strategic interactions in spending decisions.
JRC Directorate:Joint Research Centre Corporate Activities

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