Galician Law of Budgetary Discipline and Financial Sustainability: A Critical Analysis

Xoaquín Fernández Leiceaga
Authors registered in the RePEc Author Service: Xoaquín Fernandez-Leiceaga ()

Revista Galega de Economía, 2012, vol. 21, issue 1

Abstract: In this work, a critical analysis of the recent change in the Galician law of budgetary discipline has been carried out. It's main point of difference consists of establishing a maximum variation rule relating to the non-financial expenditure of the autonomous community in the decisive phase of the economic cycle..A retrospective application of the rule to the period 2002-2010 indicates that the law would imply an intense control of the expenditure and a remarkable reduction in debt of the autonomous community. Nevertheless, some problems in the application are detected. Firstly, the independent variable is the forecast of expansion of the gross domestic product, introducing a bias of discretion, as it is the responsibility of the government. It is proven that this would happen when using an objective rule, as the evolution passed from the product. Finally, the possibility of budgetary balance throughout the cycle and the ability to make the destination of the surplus flexible is considered.

Keywords: Budgetary stability; Regional spending limitation; Regional public finance; Fiscal rules (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:sdo:regaec:v:21:y:2012:i:1_7

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