Does Fiscal Discipline towards Sub-national Governments Affect Citizens' Well-being? Evidence on Health

Massimiliano Piacenza and Gilberto Turati ()

No 12, Working papers from Former Department of Economics and Public Finance "G. Prato", University of Torino

Abstract: This paper aims at assessing the impact of fiscal discipline towards sub-national governments on citizens' well-being. We model fiscal discipline by considering the expectations of deficit bailouts by Central Government, and focus on a particular dimension of well-being, namely health outcomes at the regional level. We study then how bailout expectations affect the expenditure for health care policies carried out by Regional Governments: in the presence of opportunistic behaviours by local governments - induced by soft budget constraints - bailout expectations should affect only spending inefficiency, and should not have any real effects on citizens' health. To investigate this issue, we model the efficient use of public resources for health care delivery as an input requirement frontier, and assess the effects of bailout expectations on both the structural component of health spending and its deviations from the best practice. The evidence from a sample of 15 Italian Regions observed from 1993 to 2006 highlights that bailout expectations do not significantly influence the position of the frontier, thus do not affect citizens' health. However, they appear to exert a remarkable impact on excess spending.

Keywords: Intergovernmental relationships; Soft budget constraint; Bailout expectations; Health care policy; Spending efficiency (search for similar items in EconPapers)
JEL-codes: H51 H77 I12 I18 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-04
New Economics Papers: this item is included in nep-hap, nep-hea and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.bemservizi.unito.it/repec/tur/wpaper/n12.pdf First version, 2010 (application/pdf)

Related works:
Journal Article: DOES FISCAL DISCIPLINE TOWARDS SUBNATIONAL GOVERNMENTS AFFECT CITIZENS' WELL‐BEING? EVIDENCE ON HEALTH (2014)
Working Paper: Does fiscal discipline towards sub-national governments affect citizens’ well-being? evidence on health (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:tur:wpaper:12

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