A multilevel analysis on the economic impact of public infrastructure and corruption on Italian regions

Abstract

This paper uses data contained in the Regional Public Accounts database to investigate the heterogeneity of the impact of public infrastructure across Italian regions basing the analysis also on institutional and political ground. The issue is here addressed linking the analysis of the impact of infrastructure on GDP with the issue of corruption by means of a random coefficient panel data model approach. I consider a novel objective measure of corruption that consists of the difference between a measure of the physical quantities of public infrastructure and the cumulative price government pays for public capital stocks. The empirical analysis confirms the existence of parameter heterogeneity across Italian regions and is also consistent with theoretical considerations that corruption negatively affects economic performance.orruption; public expenditure; infrastructure, random coefficients; regional public accounts.