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Testing regional intergovernmental transfers asymmetries in Uruguay

Leonel Muinelo-Gallo and Paola Azar

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we seek to complement the scarce empirical evidence for middle-income countries about the effects of unconditional central government transfers on subnational fiscal behaviour. To this end, we have used an unbalanced panel of 18 Uruguayan regional governments from 1991 to 2016. Our database includes data from the regional budget and other sources of information, which allows us to investigate the role of political economy factors. The application of panel data techniques with the use of instrumental variables highlights the presence of a sizeable flypaper effect and a significant role of variables related with the political economy design of sub-national finances.

Keywords: Fiscal federalism; Intergovernmental transfers; Flypaper effect; Endogeneity; Uruguay (search for similar items in EconPapers)
JEL-codes: E62 H7 (search for similar items in EconPapers)
Date: 2018-11-26
New Economics Papers: this item is included in nep-lam, nep-mac and nep-ure
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