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Spatial interaction in local expenditures among Italian municipalities

Author

Listed:
  • Massimiliano Ferraresi Ferraresi
  • Giuseppe Migali
  • Leonzio Rizzo
  • Francesca Nordi Nordi

Abstract

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 and statistically significant 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 do 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 Ferraresi & Giuseppe Migali & Leonzio Rizzo & Francesca Nordi Nordi, 2016. "Spatial interaction in local expenditures among Italian municipalities," Working Papers 127328819, Lancaster University Management School, Economics Department.
    • Handle: RePEc:lan:wpaper:127328819
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    File URL: http://www.lancaster.ac.uk/media/lancaster-university/content-assets/documents/lums/economics/working-papers/LancasterWP2016_009.pdf
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    References listed on IDEAS

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    1. Asmae AQZZOUZ & Michel DIMOU, 2022. "Tax mimicking in French counties," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 55, pages 113-132.

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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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