Decentralization and the duration of fiscal consolidation shifting theburden across layers of government Dirk Foremny, Agnese Sacchi, Simone Salotti
By: Foremny, Dirk
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Contributor(s): Sacchi, Agnese | Salotti, Simone.
Material type: 
ArticlePublisher: 2017Subject(s): POLITICA FISCAL | PRESUPUESTOS | CONSOLIDACION | DESCENTRALIZACION FISCAL | ORGANIZACION DE COOPERACION Y DESARROLLO ECONOMICO
In:
Public Choice v. 171, n. 3-4, June 2017, p. 359-387Summary: This paper analyzes the relationship between fiscal decentralization, the duration offiscal consolidation episodes, and their success for 17 OECD countries between 1978 and 2009. Theconsolidation of the general government budget appears to be of longer duration when expendituredecisions are more decentralized. We also find that transfers from higher levels of government are cutduring consolidation episodes, suggesting that central governments shift the burden of consolidation towards lower tiers of government. This is especially truewhen the latter have little legal autonomy to raise tax revenues and have little influence over executive decisions taken at the centrallevel. We document that this increases local governments. public debt/GDP ratios. In terms of the success of consolidation episodes, countrieswith greater degrees of decentralization appear to makesmaller improvements in their primary balance when consolidating.
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| OP 1443/2017/170/3/4-1 On the political economy of national tax revenue forecast | OP 1443/2017/170/3/4-2 The effect of school district and minicipal government financial health information on local tax election outcomes | OP 1443/2017/171/1/2 The political economy of sales taxes and sales tax exemptions | OP 1443/2017/171/3/4 Decentralization and the duration of fiscal consolidation | OP 1443/2017/172/1/2 Quadratic voting and the public good | OP 1443/2017/173/1/2 Efficient bilateral taxation of externalities | OP 1443/2018/174/1/2 Public Choice |
Disponible también en línea a través de la Biblioteca del Instituto de Estudios Fiscales. Resumen. Conclusión. Bibliografía. Apéndice.
This paper analyzes the relationship between fiscal decentralization, the duration offiscal consolidation episodes, and their success for 17 OECD countries between 1978 and 2009. Theconsolidation of the general government budget appears to be of longer duration when expendituredecisions are more decentralized. We also find that transfers from higher levels of government are cutduring consolidation episodes, suggesting that central governments shift the burden of consolidation towards lower tiers of government. This is especially truewhen the latter have little legal autonomy to raise tax revenues and have little influence over executive decisions taken at the centrallevel. We document that this increases local governments. public debt/GDP ratios. In terms of the success of consolidation episodes, countrieswith greater degrees of decentralization appear to makesmaller improvements in their primary balance when consolidating.
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