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To what extent do fiscal spending rules affect budget composition?

Wildmer Daniel Gregori

Public Sector Economics, 2018, vol. 42, issue 3, 325-345

Abstract: The aim of this paper is to investigate the extent to which local budget composition reacts to variations in fiscal spending rules. It looks at Italian subnational governments and specific changes in the institutional framework, implementing a difference-in-discontinuities strategy. Results show that when a reduction in current spending is imposed, local authorities direct the cuts towards services. Furthermore, when an increase in capital spending is allowed, there is an increase in spending on infrastructure and local public debt.

Keywords: fiscal rules; public spending; difference-in-discontinuities; local governments (search for similar items in EconPapers)
JEL-codes: C21 C23 H72 H74 H77 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:ipf:psejou:v:42:y:2018:i:3:p:325-345