Fiscal equalisation schemes and sub-central government borrowing

Salvador Barrios () and Diego Martínez

No 1401, Working Papers. Collection A: Public economics, governance and decentralization from Universidade de Vigo, GEN - Governance and Economics research Network

Abstract: We analyse the role played by fiscal equalisation schemes in determining sub-national borrowing. We test econometrically the link between the regional government primary fiscal balances and the GDP per capita in Canada, Germany and Spain. We find that either poor or rich regions can display higher regional public borrowing on average and explain how these results can be linked to the institutional design of regional equalisation systems in place in these countries. Particularly, elements such as tax effort and fiscal capacities play a relevant role in this regard. Reforms of these schemes can therefore prove instrumental in reducing regional heterogeneity in public borrowing.

Keywords: fiscal equalisation; public deficit; fiscal capacity; taxation. (search for similar items in EconPapers)
JEL-codes: H6 H7 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2014-04
New Economics Papers: this item is included in nep-pbe, nep-pub and nep-ure
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http://infogen.webs.uvigo.es/WP/WP1401.pdf First version, 2014 (application/pdf)

Related works:
Chapter: Fiscal equalization schemes and subcentral government borrowing (2017)
Working Paper: Fiscal Equalization Schemes and Subcentral Government Borrowing (2016)
Working Paper: Fiscal equalisation schemes and sub-central government borrowing (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:gov:wpaper:1401

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