Ricerc@Sapienza

From 1989 until 2018, almost 600 Italian Municipalities experienced the financial distress. Over the years, several regulatory changes have occurred to better discipline the municipal financial distress procedure to avoid selfish and unfair behaviour of local policy makers arising from informational asymmetry to the detriment of the Italian Government and the general public. The aim of the present project is i) to illustrate the historical and geographical evolution of this bankruptcy procedure over the 1989-2018 period; ii) to test the hypothesis that the legislative interventions, policies and/or the exogenous episodes were leading the dynamics of the local financial distress phenomenon; iii) to investigate the linkages between the political business cycle and the default declarations. In particular, we analyze how policies (among others, the reform of the Title V of the Italian Constitution in 2001, the Domestic Stability Pact DSP, etc.) influencing the spending capacity of local governments may impact on the default declarations. The results of the research are potentially useful for policy makers to provide a way to understand the dynamics occurred over time, to help addressing the possible regulatory updates and to better target their interventions.