Adjusting to Austerity: The Public Spending Responses of Regional Governments to the Budget Constraint in Spain and Italy

Simon Toubeau, Davide Vampa*

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

What are the effects of fiscal imbalances, and austerity, on regional-level spending? To answer this question, we examine an original dataset of yearly spending decisions of regional governments in Italy and Spain between 2003 and 2015. We find that the rise in regional deficits has an important negative effect on regional governments’ spending. The strength of this effect is however mitigated by the presence of a left-wing party in regional office. In addition, we uncover an important variation in the extent of cut-backs across policy sectors: regional governments tend to protect the health sector and focus their retrenchment efforts on social assistance and running of public institutions. Partisanship matters here too, as left-wing parties tend to protect healthcare more than their right-wing rivals. These findings bear relevance for understanding the role of partisanship and policy sector in the process of public retrenchment in multi-level states.
Original languageEnglish
JournalJournal of Public Policy
Early online date19 May 2020
DOIs
Publication statusE-pub ahead of print - 19 May 2020

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Bibliographical note

The final publication is available via Cambridge Journals Online at http://dx.doi.org/10.1017/S0143814X20000094

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