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Spatial interaction in local expenditures among italian municipalities: evidence from italy 2001-2011

Author

Listed:
  • Massimiliano Ferraresi

    (University of Ferrara)

  • Giuseppe Migali

    (University of Lancaster & University Magna Graecia)

  • Francesca Nordi

    (University of Messina & University of Ferrara)

  • Leonzio Rizzo

    (University of Ferrara & IEB)

Abstract

We investigate the existence of spatial interaction in spending decisions among Italian municipalities. We estimate a spatial autoregressive dynamic panel data model, using information on 5,564 Italian municipalities over the period 2001-2011, exploiting their border contiguity as a measure of spatial neighborhood. We find a positive effect of neighboring expenditures on total, capital and current expenditures of a given municipality. We do not find any evidence of yardstick competition when we take account of political effects, while we find a negative relationship between spatial interaction and the size of the municipality for current expenditure. Thus, we conclude that spillover effects drive the strategic interaction.

Suggested Citation

  • Massimiliano Ferraresi & Giuseppe Migali & Francesca Nordi & Leonzio Rizzo, 2016. "Spatial interaction in local expenditures among italian municipalities: evidence from italy 2001-2011," Working Papers 2016/22, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2016-22
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    Cited by:

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    More about this item

    Keywords

    Local public spending interaction; spillovers; yardstick competition; spatial econometrics; dynamic panel data; system GMM.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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