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Public Choice

, Volume 161, Issue 1–2, pp 11–29 | Cite as

Distribution of transfers and soft budget spending behaviors: evidence from Italian regions

  • Fabio Padovano
Article

Abstract

This paper examines empirically the strategic interactions among central and subcentral governments when incomplete information forces the subcentral government to form expectations about the amount of transfers that it will receive from the central one. The empirical analysis features a wide array of proxies for transfer expectations and uses an autoregressive modeling technique to estimate them on a sample of 20 Italian Regions for the 1995–2009 time interval. The analysis shows that transfer expectations are a quantitatively important component of local government spending, revealing evidence of soft budget spending behavior.

Keywords

Expectations Intergovernmental relations Transfers Local public spending Soft budget spending behavior 

JEL Classification

H71 H73 H77 D78 

Notes

Acknowledgements

Paper presented at the 2010 PEARLE seminar, the CREM-CNRS seminars of the Université de Rennes 1, the Université de Dijon, the EPIO seminars of the University of Paris 1, and the University of Aarhus, Denmark and the 2011 Public Choice Society Conference. I wish to thank Maarten Allers, Marie-Laure Breuillé, Alberto Cassone, Jean-Michel Josselin, Jean-Dominique Lafay, Peter Nannestad, Martin Paldam, Sonia Paty, Ilaria Petrarca, Yvon Rocaboy, Jørn Rattsø, Albert Solé-Ollé, Gilberto Turati, Stanley Winer, three anonymous referees and the Editor for very helpful comments previous versions of the paper. Enza Iannopollo provided excellent research assistance. The usual caveat applies.

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.CREM-CNRS and Centre Condorcet for Political EconomyUniversité de Rennes 1RennesFrance
  2. 2.DPS-Università Roma TreRomaItaly

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