The Misalignment of Fiscal Multipliers in Italian Regions
No 204, Working Papers in Public Economics from University of Rome La Sapienza, Department of Economics and Law
By accounting for the structural heterogeneity between northern and southern economies, this paper estimates fiscal multipliers resulting from shocks to current public expenditure, total public revenues and public investment in Italian regions. The estimation is carried out by estimating a panel Bayesian VAR, where the structural shocks are identified by means of sign restrictions suggested by economic theory. The results shed new light on the magnitude of regional fiscal shocks and their propagation. Moreover, a misalignment of fiscal multipliers is revealed, which is possibly policy relevant for both local and central authorities.
Keywords: Fiscal multipliers; Public investment; Panel VAR; Sign restrictions (search for similar items in EconPapers)
JEL-codes: E01 E62 E63 H5 (search for similar items in EconPapers)
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