Grant legislation vs. political factors as determinants of soft budget spending behaviors. Comparison between Italian and French regions

Jean-Michel Josselin (), Fabio Padovano and Yvon Rocaboy
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Jean-Michel Josselin: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper analyses intergovernmental transfers in France and Italy to assess to which extent soft budget spending behaviors result from slack in fiscal constraints or from political factors. It innovates on the previous literature, which concentrated on single countries, by adopting a comparative perspective. We estimate two separate but identical autoregressive forecasting models on French and Italian data to evaluate how rules and political factors lead the regional administrators of each country to form their expectations about the amount of transfers they will receive from the central government. This allows to proxy the transfer expectations in both countries and their role in determining soft budget spending behaviors. The estimates indicate that transfer expectations are a quantitatively important component of regional spending in both countries, regardless the different degrees of stringency of grant legislations and the type of grants and expenditures (total, current and capital) examined.

Keywords: Comparative analysis; Unitary states; Transfer expectations; Soft budget spending behavior; Intergovernmental relations; Local public spending; Bailing out (search for similar items in EconPapers)
Date: 2013
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Published in The European Journal of Comparative Economics, 2013, 10 (3), pp.217-254

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Journal Article: Grant legislation vs. political factors as determinants of soft budget spending behaviors. Comparison between Italian and French regions (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00920780

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