Marino, Immacolata (2013) Essays on the Unintended Effects of Local Government Spending. [Tesi di dottorato]


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Item Type: Tesi di dottorato
Lingua: English
Title: Essays on the Unintended Effects of Local Government Spending
Date: 25 November 2013
Number of Pages: 124
Institution: Università degli Studi di Napoli Federico II
Department: Scienze Economiche e Statistiche
Scuola di dottorato: Scienze economiche e statistiche
Dottorato: Scienze economiche
Ciclo di dottorato: 25
Coordinatore del Corso di dottorato:
Date: 25 November 2013
Number of Pages: 124
Uncontrolled Keywords: Public Spending, Public Procurement, Firm Dynamics
Settori scientifico-disciplinari del MIUR: Area 13 - Scienze economiche e statistiche > SECS-P/02 - Politica economica
Area 13 - Scienze economiche e statistiche > SECS-P/05 - Econometria
Area 13 - Scienze economiche e statistiche > SECS-P/06 - Economia applicata
Date Deposited: 11 Dec 2013 09:50
Last Modified: 09 Oct 2014 11:15


With the introduction of the European Stability and Growth Pact most European members introduced domestic fiscal rules to make all different levels of govern- ment responsible for the control of central public accounts. There is a broad debate on the suitability of the fiscal rules set in the Treaty of Maastricht and in the Stability and Growth Pact. The present PhD’s thesis review the evolution of Domestic Stability Pact in Italy (Chapter 1) and empirically investigate two research questions. In Chapter 2 we explore the impact of capital expenditure constraints on investments in public works. After 2008, the Italian central gov- ernment strongly changed financial rules aimed at imposing fiscal discipline on local governments. Municipalities subject to the Domestic Stability Pact (DSP) collided with new stronger expenditure restrictions and tougher punishments for non-compliers. This institutional change allows us to identify a causal relationship between the DSP and investment in public works implementing a “Difference-in- Differences” (D-i-D) design. Being exposed to the Pact reduces investment in public works by 47% and number of auctions by 44%, while increases winning re- bate by 5.5% and number of bidders by 16%. In Chapter 3 we evaluate the effect of a reduction in investment for public works on new firm formation. The results show that the amount invested in public works by local governments is a very important determinant of new firm formation. A one standard deviation decrease in total starting value decreases the entry rate for all firms by 21% and the entry rate for construction firms only by 29%.


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