Università della Svizzera italiana

Earthquakes, grants and public expenditure : how municipalities respond to natural disasters

Masiero, Giuliano ; Santarossa, Michael

We analyze the response of municipalities to the occurrence of natural disasters (earthquakes) in Italy, in terms of spending behavior, use of upper tier transfers and recovery. We find evidence of increasing expenditure for about 12 years after the shock, with asymmetric responses between matching (earthquake-related) and unconditional grants, and heterogeneous flypaper effects across the...