Debora Gambina (p), Fabio Mazzola

Marina Van Geenhuizen

In this work we assess the impact of the European Cohesion Policy by focusing on potential policy ineffectiveness occurring when the economic effects fall outside the treated areas. In evaluating the effectiveness of a public policy, aimed at territorial development, it is crucial to consider that spatial interaction can cause spillover effects when the gains of public investment projects are also captured by the territories adjacent to treated areas. This type of spillover effects is, of course, inherently positive, and desirable. However, when regional policy effects are mainly captured by the neighbouring territories, spillovers determine displacement effects. The assessment of Cohesion Policy is carried out by considering the growth of Italian NUTS-3 regions (provinces) during the recent programming periods (2007-2013 and 2014-2020) and taking into account spatial autocorrelation effects between neighbouring territories. The research design is based on spatial panel models that discriminate direct from indirect (spillovers) effects. Since the period under evaluation includes the Great Recession, we test the possible change on Structural Funds effectiveness and on spatial spillover effects during the crisis years. We also consider national Cohesion Policy intervention through domestic specific funds (Fondo di Sviluppo e Coesione and Piano di Azione e Coesione). We implement an analysis that uses data referred to completed project under the hypothesis that concluded projects are the most suitable for generating economic effects on local economies. The panel dataset was reconstructed starting from the Italian database on Cohesion Policy (Opencoesione). The econometric methodology dwells upon a Fixed Effect-Spatial Durbin Model (FE-SDM) with a spatial lag for both the dependent and the explanatory variables as well as policy variables, and other economic variables such as attractiveness, competitiveness, human capital, and infrastructural endowment. Hence, we disentangle the direct effects of each explanatory variable on the region under analysis from the (indirect) spillover effects on the other regions. Our main results show that, in Italy, the spatial autocorrelation pattern have an impact on regional policy causing displacement effects. Therefore, in designing the development policies, the policy maker cannot overlook the non-neutrality of their spillover effects. As for the Great Recession impact on Cohesion Policy effectiveness, spatial spillovers determined by the use of European Structural Funds in neighbouring areas have decreased during the crisis years, thus hampering resilience patterns for local economies.

Artem Demyanenko (p)

Debora Gambina

This paper attempts to assess the impact of fiscal policy measures in the regions of Russia on GRP. Interest in studying issues related to fiscal policy in the Russian Federation is largely due to recent government decisions in this field, for example, an increase in the VAT interest rate and significant budgetary spending for the implementation of national projects. The Russian Federation units are very different from each other in terms of socio-economic indicators. Therefore, the study of their reaction to the common fiscal policy is very important. Recent studies on the estimation of fiscal policy multipliers at the US state level emphasize the importance of consideration of spillover effects in the model. While in the Russian researches this issue was considered only at the national level. We used panel data for 80 Russian regions to build a spatial vector autoregression model that allows for spillover effects by using a first order contiguity matrix. Having analyzed the impulse response functions of the GRP to the shock of an increase in expenditures in each main category of the consolidated budgets of the regions by 1%, we have shown that expenditures on the national economy, general government issues and healthcare are among the most effective ones. Additionally, rather high values of the response at the zero time point were observed, which may indirectly indicate the procyclical nature of fiscal policy in Russian regions.
See extended abstract.

Mihaela Simionescu (p), Javier Cifuentes-Faura

Artem Demyanenko

Considering the necessity of transparency in public finance, this paper examines the connection between expenditure, revenues and transparency index in Spanish municipalities in the period 2008-2017 for which data are available. The results based on panel data approach (Mean Group and Common Correlated Effects Mean Group estimators; Juodis, Karavias and Sarafidis (2021) causality test) and ANOVA/linear Dependent Dirichlet Process mixture are useful for local policies. The empirical findings indicate a positive impact of direct taxes and unemployment rate on transparency index. On the other hand, there is a direct effect of transparency on direct taxes and personnel expenses and a indirect one on indirect taxes. Fiscal synchronization for direct taxes, indirect taxes and expenditure and spend-and-tax assumption for total revenues are supported. There is a bidirectional causality between direct taxes and transparency index. Political party exerts a causal effect on debt only in the case of mayors that are males, while unemployment rate is cause for deficit only in the case of mayors that are males.

Marina van Geenhuizen (p), Razieh Nejabat

Mihaela Simionescu

Energy transitions are increasingly supported by municipalities. There are, however, doubts on whether municipalities are an adequate organization and scale level, concerning new technology creation and market introduction. In this context, the paper pictures developments of local young technology firms in bringing energy inventions to market, in particular, how they may benefit from municipalities’ support to them. Derived from a sample in North Europe, two findings make a valuable contribution to literature. Firstly, a substantial share of young high technology firms, i.e. almost 40 per cent, fails in market introduction, and if reached the market, a 30 per cent is rather late. Obstacles tend to originate from high creativity and risk-taking in metropolitan area and late (no) collaboration. Secondly, several municipalities’ initiatives appear useful in satisfying young technology firms’ needs, but the initiatives are fragmented and lack priority. However, partnering in professional start-up organizations tends to improve the situation, indicating that the municipal level is promising in transitional change.