Cyclically Adjusted Local Government Balances

46 Pages Posted: 2 Feb 2013

Date Written: December 20, 2012

Abstract

The paper provides an analysis of cyclically-adjusted budget balances of local governments in Italy for the period 2002-07. We find that local government balances appear to be relatively sensitive to the business cycle. In particular, a shock of 1 per cent in GDP changes their resources by approximately 0.6 billion. Within the sample period, both central and local policies concerning local government budgets had a sizeable impact on local government balances in cyclically-adjusted terms.

Keywords: local public finance, budget sensitivity, business cycle, tax elasticity

JEL Classification: E32, E62, H71

Suggested Citation

Panicara, Eugenia and Rigon, Massimiliano and Tomat, Gian Maria, Cyclically Adjusted Local Government Balances (December 20, 2012). Bank of Italy Occasional Paper No. 142. Available at SSRN: https://ssrn.com/abstract=2210400 or http://dx.doi.org/10.2139/ssrn.2210400

Eugenia Panicara

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Massimiliano Rigon

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Gian Maria Tomat (Contact Author)

Bank of Italy ( email )

Via XX Settembre 97/E
Rome, 00187
Italy
+39-06-47923179 (Phone)
+39-06-47925626 (Fax)

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