Financial Indicators as Determinants of Mayoral Elections. Evidence from Italian Local Governments.

The chapter seeks to contribute to the literature on determinants of local government election by adopting a different perspective focused on the effects of financial indicators on the elections of mayors. Using the agency and the public choice theory, this study implements a model where specific financial indicators—whose selection takes into account the increased autonomy and responsibility of local politicians—have been included to document their effect on mayoral re-election. Focusing on the Italian context, the chapter examines a sample of 129 municipalities during the period 2008-2014, where several elections were held. By using different estimators, findings indicate that the re-election of mayors is affected by the level of indebtedness and the current equilibrium. In addition, current spending is better valued by citizens/voters than capital expenditure, which increases the probability of being re-elected

Fiscal Responsibility and Multi-Level Governance: Bridging the Gap Between Policy and Management

Public-policy assumptions regarding sub-national governments' financial behavior are based on economic rationality. Therefore, to achieve fiscal stability at the macro level, central governments use fiscal rules both to constrain the behavior of local policymakers and to resolve deficit/debt biases. Using the Italian fiscal governance system as an illustrative example, this chapter considers both the tensions derived from achieving fiscal responsibility at the national level in a decentralized environment and the difficulties of maintaining adequate performance at the local government level. It is argued that the public management perspective can be helpful not only at the micro level but also at the macro level in developing public policies to promote fiscal stability. It is suggested that public policy should adopt a more holistic approach toward fiscal responsibility in multi-level governance environments. Such an approach requires a deep understanding of the determinants of financial viability of public sector organizations