Spatial Interaction in Local Expenditures Among Italian Municipalities: Evidence from Italy 2001-2011

IEB Working Paper 2016/22

27 Pages Posted: 21 Sep 2016

See all articles by Massimiliano Ferraresi

Massimiliano Ferraresi

University of Ferrara

Giuseppe Migali

Lancaster University - Lancaster University Management School; Magna Graecia University of Catanzaro

Francesca Nordi

University of Messina

Leonzio Rizzo

University of Ferrara - Faculty of Economics

Date Written: September 20, 2016

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.

Keywords: Local public spending interaction, spillovers, yardstick competition, spatial econometrics, dynamic panel data, system GMM

JEL Classification: C23, H72

Suggested Citation

Ferraresi, Massimiliano and Migali, Giuseppe and Nordi, Francesca and Rizzo, Leonzio, Spatial Interaction in Local Expenditures Among Italian Municipalities: Evidence from Italy 2001-2011 (September 20, 2016). IEB Working Paper 2016/22, Available at SSRN: https://ssrn.com/abstract=2841313 or http://dx.doi.org/10.2139/ssrn.2841313

Massimiliano Ferraresi

University of Ferrara ( email )

Via del Gregorio 13
Ferrara, 44100
Italy

Giuseppe Migali

Lancaster University - Lancaster University Management School ( email )

Bailrigg
Lancaster, LA1 4YX
United Kingdom

Magna Graecia University of Catanzaro ( email )

Viale Europa - Germaneto
Catanzaro, Catanzaro 88100
Italy

Francesca Nordi

University of Messina ( email )

Piazza Pugliatti, 1
Messina, 98122
Italy

Leonzio Rizzo (Contact Author)

University of Ferrara - Faculty of Economics ( email )

C.so Ercole I° d'Este 37
Ferrara, 44100
Italy

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