The short and the long run relationship between fiscal decentralization and public expenditure composition in Italy

- We analyse the impact of fiscal decentralization on the composition of public expenditure.
- We distinguish between short run and long run effects of decentralization.
- A long-run relationship between decentralization and expenditure composition exists.
- The impact of fiscal decentralization varies across different public spending categories.

This article is an original contribution to the understanding of the relationship between fiscal decentralization and public expenditure composition. Relying on recent panel cointegration techniques, our findings show that the level of decentralization influences the expenditure composition of the Italian regional administrations in the long run.