Expenditure-Based Equalization Transfers

Francois Vaillancourt and Richard M. Bird ()

International Studies Program Working Paper Series, at AYSPS, GSU from International Studies Program, Andrew Young School of Policy Studies, Georgia State University

Abstract: Intergovernmental transfers are a major source of revenue for sub-national (regional and local) governments (hereafter SNG), representing 60 percent of their total revenue for developing countries and 33 percent for OECD countries (Shah, 2004). The continued and even growing decentralization observed in many countries calls for a better understanding of the design, role and impact of fiscal transfers. Prominent among the objectives commonly attributed to intergovernmental fiscal transfers is ‘equalization’ although exactly what this term means is often rather obscure and may differ from country to country or even over time within any one country. Our focus in this paper is specifically on those transfers specifically labeled as equalization transfers and in particular on the question of the extent to which and the method by which differences in expenditure ‘needs’ can and should be formally incorporated into such transfers.

Keywords: Expenditure; Equalization Transfers; Intergovernmental transfers; sub-national government (search for similar items in EconPapers)
Date: 2004-11-01
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Working Paper: Expenditure-Based Equalization Transfers (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:ays:ispwps:paper0410

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