Fiscal Policy, public investment, and structural change:A P-SVAR analysis on Italian regions
Francesco Zezza and
No 226, Working Papers in Public Economics from University of Rome La Sapienza, Department of Economics and Law
This work analyses the regional impact of public investments focusing on three domains that are key for the Italian National Recovery and Resilience Plan (NRRP): green, digital and education/knowledge. Relying on a unique database ('Conti Pubblici Territoriali'), we perform a P-SVAR model showing that fiscal policy shocks have positive and long-lasting effects on GDP and private investments. A relevant heterogeneity is detected, though. In particular, shocks to digital spending only timidly crowd-in private investment while a stronger effect is found concerning the green sector. Second, public investments have a significant impact on regions' â€˜structural upgradingâ€™, i.e., export competitiveness and share of high-tech manufacturing. Third, confirming previous findings, shocks to public spending are found to have larger effects in centre-north regions, in terms of both GDP and private investments. Nevertheless, public spending turns out to have a stronger structural effect in the south than in the centre-north, highlighting the relevant role that the NRRP may play in reducing the Italian north-south divide
Keywords: Fiscal multipliers; Panel SVAR; Italian regions; North-South divide (search for similar items in EconPapers)
JEL-codes: C33 E62 H70 R58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:sap:wpaper:wp226_0
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