Municipality Budget Rules and Debt: Is the Italian Regulation Effective?

27 Pages Posted: 2 Sep 2016

See all articles by Daniela Monacelli

Daniela Monacelli

Bank of Italy

Maria Grazia Pazienza

University of Florence - Dipartimento di Studi sullo Stato

Chiara Rapallini

University of Florence

Date Written: Fall 2016

Abstract

This article studies the local fiscal rules in force in Italy — the Domestic Stability Pact and debt constraints — that have been adopted to coordinate levels of government and be compliant with the European Stability and Growth Pact. The aim is to assess the effects of such rules on local borrowing and investments, the latter being crucial for growth. To this end, a dataset of Italian municipality budgets from 1999 to 2009 is exploited. The analysis shows that fiscal rules help to control local debt, but they have also led to a sharp decrease in investments, especially among compliant municipalities.

Suggested Citation

Monacelli, Daniela and Pazienza, Maria Grazia and Rapallini, Chiara, Municipality Budget Rules and Debt: Is the Italian Regulation Effective? (Fall 2016). Public Budgeting & Finance, Vol. 36, Issue 3, pp. 114-140, 2016, Available at SSRN: https://ssrn.com/abstract=2833644 or http://dx.doi.org/10.1111/pbaf.12094

Daniela Monacelli (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Roma, 00184
Italy

Maria Grazia Pazienza

University of Florence - Dipartimento di Studi sullo Stato ( email )

Via delle Pandette 21
Firenze, 50127
Italy
00390554374516 (Phone)
00390554374919 (Fax)

HOME PAGE: http://www.studistato.unifi.it

Chiara Rapallini

University of Florence ( email )

Piazza di San Marco, 4
Florence, 50121
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
0
Abstract Views
413
PlumX Metrics