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Monitoring sub-central government spending in Spain

Laura Fernández-Caballero (), Diego J. Pedregal and Javier Pérez
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Laura Fernández-Caballero: Banco de España
Diego J. Pedregal: Universidad de Castilla-La Mancha

No 1127, Working Papers from Banco de España

Abstract: The evolution of Regional and Local governments’ spending in Spain is currently under close scrutiny by national and international investors and analysts, international organizations and rating agencies. Indeed, some 50% of general government spending and some 70% of public employment are managed by Regions and Municipalities, which consequently have to bear a great portion of the overall fiscal consolidation plan currently under way. Despite recent efforts of the Spanish government at increasing transparency, the significant shortages of the existing data render the task of monitoring regional and local governments’ public spending in real-time a complicated endeavor. Within this framework, we exploit all available short-term information on sub-national governments’ spending from scattered sources, and find a subset of indicators usable for real-time policy analysis. In particular: (i) we compile a dataset on quarterly and monthly regional government’s spending variables, by reviewing all available, scattered sources, and put together a database usable for economic and policy analysis; (ii) we exploit the compiled information, and other additional sources, by fitting time-series mixed-frequencies models to the data, and show the forecasting and monitoring capabilities of the selected short-term fiscal indicators; (iii) we show that official annual budgetary targets do present a reasonable forecasting performance when used as indicators of regional and local spending targets in national accounts terms, in particular when used in combination with time series indicators.

Keywords: Regional and local public finances; government expenditure; fiscal forecasting (search for similar items in EconPapers)
JEL-codes: E17 E62 H68 H72 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2011-10
New Economics Papers: this item is included in nep-for, nep-geo, nep-mac and nep-ure
References: View complete reference list from CitEc

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Journal Article: Monitoring Sub-central Government Spending in Spain (2012) Downloads
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