Horizontal Interaction on Local Councils' Expenditures. Evidence from Italy

Barbara Ermini () and Raffaella Santolini
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Barbara Ermini: Universita' Politecnica delle Marche, Dipartimento di Economia

No 278, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: This paper seeks for public spending interdependence among jurisdictions within some Italian local councils. We find significant positive interaction among spending of neighboring local councils both at the level of total expenditure and also for different subcategories. However, this result applies only when spatial dependence is analyzed among geographically contiguous jurisdictions different criteria of proximity do not give rise to any substantial form of interaction among local governments. Attempts to identifying the source of this interaction seem to refuse yardstick competition hypothesis. Fiscal spill-overs among jurisdictions appear as a more plausible explanation; we also find evidence that local councils partnerships fail to effectively internalize these spill-overs. Finally, commuting affects spatial interdependence among jurisdictions.

Keywords: local councils partnerships; local public expenditures; spatial econometrics; spill-overs; strategic interaction; yardistick competition (search for similar items in EconPapers)
JEL-codes: C31 D71 D72 H72 H73 (search for similar items in EconPapers)
Pages: 25
Date: 2007-02
New Economics Papers: this item is included in nep-geo, nep-pbe, nep-soc and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:anc:wpaper:278

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