In the post-pandemic landscape, there is a renewed focus on how government spending can accelerate recovery and ensure durable economic sustainability.

The study “Local Fiscal Multipliers in a Data-Scarce Environment: The Effectiveness of Government Spending Across Italian Regions” by Cavaliere, Fanelli, and Mazzali (2025) confirms that government spending has a positive impact on output in Italy. However, the persistence of fiscal spending shocks is not sufficiently strong to foster debt-output stabilization in the medium/long term, and the estimated effects are extremely uncertain.

Significant variations emerge across regions and expenditure types. To increase effectiveness, the study suggests that fiscal policies should be tailored to local conditions and paired with structural reforms. Moreover, public investment is preferable for long-term economic growth, given its higher and more persistent returns compared to consumption-based spending.