Decentralization and the duration of fiscal consolidation: shifting the burden across layers of government
Dirk Foremny (),
Agnese Sacchi () and
Additional contact information
Dirk Foremny: University of Barcelona
Public Choice, 2017, vol. 171, issue 3, 359-387
Abstract This paper analyzes the relationship between fiscal decentralization, the duration of fiscal consolidation episodes, and their success for 17 OECD countries between 1978 and 2009. The consolidation of the general government budget appears to be of longer duration when expenditure decisions are more decentralized. We also find that transfers from higher levels of government are cut during consolidation episodes, suggesting that central governments shift the burden of consolidation towards lower tiers of government. This is especially true when the latter have little legal autonomy to raise tax revenues and have little influence over executive decisions taken at the central level. We document that this increases local governments’ public debt/GDP ratios. In terms of the success of consolidation episodes, countries with greater degrees of decentralization appear to make smaller improvements in their primary balance when consolidating.
Keywords: Fiscal consolidation; Duration analysis; Fiscal decentralization (search for similar items in EconPapers)
JEL-codes: E62 H60 H77 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11127-017-0441-0 Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:171:y:2017:i:3:d:10.1007_s11127-017-0441-0
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2
Access Statistics for this article
Public Choice is currently edited by WIlliam F. Shughart II
More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla ().