Does fiscal discipline towards sub-national governments affect citizens’ well-being? evidence on health

Massimiliano Piacenza and Gilberto Turati ()

No 2010/56, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: This paper aims at assessing the impact on citizens’ well-being of fiscal discipline imposed by Central Government to sub-national governments. Since health care policies involve strategic interactions between different layers of governments in many different countries, we focus on a particular dimension of well-being, namely citizens’ health. We model fiscal discipline by considering sub-national governments expectations of future deficit bailouts from the Central Government. We then study how these bailout expectations affect the expenditure for health care policies carried out by decentralized governments. To investigate this issue, we separate efficient health spending from inefficiencies by estimating an input requirement frontier. This allow us to assess the effects of bailout expectations on both the structural component of health expenditure and its deviations from the ‘best practice’. The evidence from the 15 Italian Ordinary Statute Regions (observed from 1993 to 2006) points out that bailout expectations do not significantly influence the position of the frontier, thus do not affect citizens’ health. However, they appear to exert a remarkable impact on excess spending.

Keywords: Intergovernmental relationships; soft budget constraint; bailout expectations; health care policy; spending efficiency. (search for similar items in EconPapers)
JEL-codes: H11 H75 H77 I12 I18 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2010
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: DOES FISCAL DISCIPLINE TOWARDS SUBNATIONAL GOVERNMENTS AFFECT CITIZENS' WELL‐BEING? EVIDENCE ON HEALTH (2014)
Working Paper: Does Fiscal Discipline towards Sub-national Governments Affect Citizens' Well-being? Evidence on Health (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2010-56

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