Measuring spatial effects in presence of institutional constraints: the case of Italian Local Health Authority expenditure

Vincenzo Atella, Federico Belotti, Domenico Depalo and Andrea Piano Mortari

No 278, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: Over the last decades spatial econometrics models have represented a common tool for measuring spillover effects across different geographical entities (counties, provinces, regions or nations). Unfortunately, no one has considered that when these entities share common borders but obey to different institutional settings, ignoring this feature may induce misleading conclusions. In fact, under these circumstances, and if institutions do play a role, we expect to find spatial effects mainly \within" entities belonging to the same institutional setting, while the "between" effect across different institutional settings should be attenuated or totally absent, even if the entities share a common border. In this case, relying only on geographical proximity will then produce biased estimates, due to the composition of two distinct effects. To avoid these problems, we derive a methodology that partitions the standard contiguity matrix into within and between contiguity matrices, allowing to separately estimate these spatial correlation coefficients and to easily test for the existence of institutional constraints. In our empirical analysis we apply this methodology to Italian Local Health Authority expenditures, using spatial panel techniques. Results show a strong and significant spatial coefficient only for the within effect, thus confirming the importance and validity of our approach.

Keywords: spatial; health expenditures; institutional setting; panel data (search for similar items in EconPapers)
JEL-codes: C31 H51 H72 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-05-08, Revised 2013-05-08
New Economics Papers: this item is included in nep-eff, nep-eur, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Measuring spatial effects in the presence of institutional constraints: The case of Italian Local Health Authority expenditure (2014)
Working Paper: : Measuring spatial effects in presence of institutional constraints: the case of Italian Local Health Authority expenditure (2014)
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