Does decentralization affect regional public spending in Italy?

This paper tests the presence of spatial interdendencies of Italian regional public spending and its determinants in the period 1996-2010 through spatial panel models. In particular, the analysis controls for the impact of the reform of the constitutional article no. 117, in the perspective of wider administrative decentralization. Results show that administrative decentralization has greatly increased spatial interdependencies of public spending choices that appear to pass mainly through neighbours’ determinants. Other findings are the presence of congestion and mobility effects, a shift in demand to the private sector especially for education and a positive correlation between left-wing governments and total and general administration expenditures.