NDLI: Fiscal Decentralization and Spending Efficiency of Local Governments An Empirical Investigation on a Sample of Italian Municipalities

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Fiscal Decentralization and Spending Efficiency of Local Governments An Empirical Investigation on a Sample of Italian Municipalities

Content Provider	Semantic Scholar
Author	Fraquelli, Giovanni Piai, Cristina
Copyright Year	2010
Abstract	In Italy, as in other countries, recent legislative reforms (simply discussed or partially implemented) aim at increasing the fiscal autonomy of local governments, in order to align spending with funding responsibility and, by this way, to improve both the efficiency and the effectiveness of public services provided to the citizens. The purpose of this paper is to assess spending efficiency for Italian municipalities, and to investigate – in particular – the effects of fiscal decentralization, considering also the role played by electoral accountability of incumbent politicians. The analysis relies on a sample of 262 Italian municipalities and exploits both parametric (SFA) and nonparametric (DEA) frontier techniques to study efficiency performances and their main determinants. Consistently with fiscal federalism theories, our preliminary results suggest that more autonomous municipalities exhibit less inefficient spending behaviours. Moreover, the tighter budget constraint implied by the Domestic Stability Pact, which limits the deficit of some local governments, appears to be an important driver of spending efficiency. Finally, in line with the electoral budget cycle approach, we find that the shorter is the distance from next elections year the higher is excess spending with respect to the best-practice frontier. Other political features of governing coalition, such as for instance age and gender of the mayor, do not seem generally to exert any significant impact on inefficiency levels.
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://www.hermesricerche.it/elements/WP_09_02_BPT.pdf
Language	English
Access Restriction	Open
Content Type	Text
Resource Type	Article

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