Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/331592 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12126
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
This paper documents substantial fiscal waste in the context of one the world's largest regional development programs - the EU Cohesion Policy. We study Italy, and find that 20% of funding commitments are never paid out and funneled into unfinished or never-started projects. In our setting, this happens for reasons unrelated to fiscal constraints - municipalities appear to simply leave money on the table. Foregone spending is more prevalent in Southern regions, but there is also stark variation across municipalities within regions. We show that such under-utilization of available funds is strongly associated with limited administrative capacity of local governments.
Subjects: 
foregone spending
state capacity
fiscal waste
Document Type: 
Working Paper
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