Fiscal policy, public investment and structural change: a P-SVAR analysis on Italian regions

Francesco Zezza and Dario Guarascio

Regional Studies, 2024, vol. 58, issue 6, 1356-1373

Abstract: This study analyses the regional impact of public expenditures focusing on three domains central to the Italian National Recovery and Resilience Plan (NRRP): green, digital and knowledge. Relying on a regional public expenditures sectoral dataset for the period 2000–19, we perform a panel structural vector autoregressive (P-SVAR) model showing that fiscal policy has positive and long-lasting effects on gross domestic product (GDP) and private investments. A relevant heterogeneity is detected, relative to: (1) the effects of sectoral spending in crowding-in investment; (2) the impact on regions’ ‘structural upgrading’; and (3) a discrepancy in fiscal multipliers across macro-areas. Nevertheless, the results suggest that the NRRP may help in reducing the Italian divide.

Date: 2024
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Working Paper: Fiscal Policy, public investment, and structural change:A P-SVAR analysis on Italian regions (2022)
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DOI: 10.1080/00343404.2023.2251533

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