How sticky are local expenditures in Italy? Assessing the relevance of the flypaper effect through municipal data

Cost Stickiness in the local governments of Santa Catarina

“…In parallel to the costs stickiness approach, the results corroborate studies on flypaper by Volden (1999), Levaggi andZanola (2003), andLago-Peñas (2008), who found asymmetric impact of government transfers on spending in US states, Italian and Spanish local governments, successively. In turn, Gamkhar and Oates (1996), Gennari andMessina (2014), andSakurai (2013) did not obtain sufficient evidence to confirm asymmetry in flypaper behavior in US states, Italian and Brazilian local governments.…”

“…The group that involves expenses with National Defense, Public Security, and Foreign Affairs had no expenses registered, since they are not typical municipal expenses. The representativeness of revenues and expenditures, within the executed public budget, is already enough to realize that asymmetry based, only on transfer revenues (Gamkhar & Oates, 1996;Volden, 1999;Levaggi & Zanola, 2003;Lago-Peñas, 2008;Sakurai, 2013;Gennari & Messina, 2014), can distort the statistical model of Anderson et al (2003), as it considers the totals. Table 5 presents the statistics of the regression model estimations, whose research results we obtained as defined in the methodological procedures.…”

“…Sakurai (2013) investigated asymmetric behavior in Brazilian municipalities, analyzing totals and separately by expenditure, and current and capital revenues. Gennari and Messina (2014) studied the same behavior in Italian local governments by total expenditure. Thus, Table 1 summarizes the commented studies and suggests the behavior found associating the flypaper effect with the cost stickiness effect.…”

“…Indirectly, research reveals non-proportional variations in public expenditure given increases or decreases in revenues, for example, in studies on the flypaper effect (Gamkhar & Oates, 1996;Volden, 1999;Kandil, 2001;Levaggi & Zanolla, 2003;Lago-Peñas, 2008;Sakurai, 2013;Gennari & Messina, 2014), which measures whether local public expenditures are equally sensitive to increases in intergovernmental transfers and personal income (Levaggi & Zanolla, 2003;Lago-Peñas, 2008;Gennari & Messina, 2014). Although flypaper behavior measures specific public accounts symmetry or asymmetry, it concurrently opens up the possibility that CST is also applicable to the public sector, as according to the model proposed by Anderson et al (2003), non-proportional variations in costs are expected due to an increase or decrease in revenues.…”

Cost Stickiness nos governos locais de Santa Catarina

“…Indiretamente, pesquisas revelam variações não proporcionais das despesas públicas diante do aumento ou redução das receitas como, por exemplo, em estudos sobre o efeito flypaper (Gamkhar & Oates, 1996;Volden, 1999;Kandil, 2001;Levaggi & Zanolla, 2003;Lago-Peñas, 2008;Sakurai, 2013;Gennari & Messina, 2014), que mede se as despesas públicas locais são igualmente sensíveis a aumentos de transferências intergovernamentais e renda pessoal (Levaggi & Zanolla, 2003;Lago-Peñas, 2008;Gennari & Messina, 2014). Apesar de o comportamento flypaper medir simetria ou assimetria de contas públicas específicas, concomitantemente, abre a possibilidade da TCS também ser aplicável ao setor público, visto que, de acordo com o modelo proposto por Anderson et al (2003), esperam-se variações não proporcionais dos custos diante de aumento ou redução das receitas.…”