Il Patto di Stabilità Interno in Italia: una valutazione della regola fiscale e un’applicazione agli enti locali della regione Lazio

The 1999-2006 versions of the Italian Domestic Stability Pact showed many pitfalls and a modest impact with respect to the aim of aligning the fiscal behaviour of the sub-central governments with the national commitments within the European Stability and Growth Pact. The Domestic Pact has been reformed in 2007 and 2008 to tighten the monitoring and sanctions framework and to avoid some unpleasant results in the budget composition. However, some unpleasant features spoil the new regime: its budgetary rules are relatively complicated, they rely exclusively on historical data and do not provide for an adequate set of incentives to promote allocative efficiency; no borrowing constraints are applied; side effects on resource re-distribution are ignored. The assessment of the new Domestic Pact against the data on the sub-central governments of a Centre Italy region (Lazio) confirms the above findings.