Effects of fiscal policy in the Northern and Southern regions of Italy

Paolo Piacentini, Stefano Prezioso and Giuseppina Testa

International Review of Applied Economics, 2016, vol. 30, issue 6, 747-770

Abstract: This paper contributes to a growing body of work within ‘fiscal policy studies,’ investigating the recent role of fiscal policy on the Italian economy. Using annual data collected on a regional basis, this study estimates and compares the (impact and cumulative) fiscal multipliers across the North and the South—the less developed area—of Italy. With recourse to a simultaneous equation model for the two macro-areas of Italy, it estimates the overall impact of the measures of budget consolidation policies during the period 2011–2013. Our analysis reveals that tax increases and, with a greater impact, spending cuts, hit the South harder compared to the North.

Date: 2016
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DOI: 10.1080/02692171.2016.1208738

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