Fiscal Institutions and the Relation between Central and Sub-National Government Fiscal Balances

John Thornton and Amine Mati
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Amine Mati: International Monetary Fund, Washington, D.C.

Public Finance Review, 2008, vol. 36, issue 2, 243-254

Abstract: Skeptics of fiscal decentralization argue that it can complicate fiscal stabilization policies at the level of the central government because of uncoordinated fiscal actions by the national and sub-national tiers of government. However, panel data estimates for Organisation for Economic Co-operation and Development economies suggest that this danger has been overstated in that changes in the fiscal balances of central and sub-national governments are highly positively correlated. This result partly reflects the success of institutional arrangements that govern intergovernmental fiscal relations and appears unrelated to the extent of fiscal decentralization.

Keywords: fiscal decentralization; macroeconomic management; procyclicality (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:36:y:2008:i:2:p:243-254

DOI: 10.1177/1091142107308297

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