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Expenditure-Based Equalization Transfers

In: Fiscal Equalization

Author

Listed:
  • Richard Bird

    (University of Toronto)

  • François Vaillancourt

    (Université de Montréal)

Abstract
Intergovernmental transfers are a major source of revenue for sub-national (regional and local) governments (hereafter SNG), representing 60 percent of their total revenue for developing countries and 33 percent for OECD countries (Shah, 2004). The continued and growing decentralization observed in many countries calls for a better understanding of the design, role and impact of fiscal transfers. Prominent among the objectives commonly attributed to intergovernmental fiscal transfers is ‘equalization’ although exactly what this term means is often rather obscure and may differ from country to country or even over time within any one country. Our focus in this paper is on those transfers specifically labeled as equalization transfers, and in particular on the extent to which and the method by which differences in expenditure ‘needs’ can and should be formally incorporated into such transfers.

Suggested Citation

  • Richard Bird & François Vaillancourt, 2007. "Expenditure-Based Equalization Transfers," Springer Books, in: Jorge Martinez-Vazquez & Bob Searle (ed.), Fiscal Equalization, chapter 0, pages 259-289, Springer.
    • Handle: RePEc:spr:sprchp:978-0-387-48988-9_11
    DOI: 10.1007/978-0-387-48988-9_11
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    References listed on IDEAS

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    1. Robin Boadway, 2004. "The Theory and Practice of Equalization," CESifo Economic Studies, CESifo Group, vol. 50(1), pages 211-254.
    2. L. S. Wilson, 2003. "Equalization, Efficiency and Migration: Watson Revisited," Canadian Public Policy, University of Toronto Press, vol. 29(4), pages 385-395, December.
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    6. Zhihua Zhang & Jorge Martinez-Vazquez, 2003. "The System of Equalization Transfers in China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0312, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. Jeff Petchey & Sophia Levtchenkova, 2004. "Fiscal Capacity Equalization and Economic Efficiency," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0415, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
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    10. Roy Bahl & Jorge Martinez-Vazquez, 2003. "Fiscal Federalism and Economic Reform in China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0313, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    11. Charles E. McLure, Jr. & Jorge Martinez-Vazquez, 1998. "Intergovernmental Fiscal Relations in Vietnam," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9802, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    12. Michael Smart, 1998. "Taxation and Deadweight Loss in a System of Intergovernmental Transfers," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 189-206, February.
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    Cited by:

    1. Dafflon, Bernard, 2010. "Local Fiscal Equalization: a New Proposal and an Experiment," FSES Working Papers 418, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    2. Audun Langørgen, 2015. "A structural approach for analyzing fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 376-400, June.
    3. Bhatt, Antra & Scaramozzino, Pasquale, 2013. "Federal Transfers and Fiscal Discipline in India: An Empirical Evaluation," ADB Economics Working Paper Series 343, Asian Development Bank.
    4. Rosella Levaggi & Francesco Menoncin, 2014. "Health care expenditure decisions in the presence of devolution and equalisation grants," International Journal of Health Economics and Management, Springer, vol. 14(4), pages 355-368, December.
    5. Héctor Cardozo, 2021. "An estimation of expenditure needs for Argentinian provinces: A structural modeling approach," Ensayos de Política Económica, Departamento de Investigación Francisco Valsecchi, Facultad de Ciencias Económicas, Pontificia Universidad Católica Argentina., vol. 3(3), pages 41-75, Octubre.
    6. Maarten A Allers & Lewis J Ishemoi, 2011. "Equalising Spending Needs of Subnational Governments in a Developing Country: The Case of Tanzania," Environment and Planning C, , vol. 29(3), pages 487-501, June.
    7. Fraschini, Angela, 2006. "Fiscal federalism in big developing countries: China and India," POLIS Working Papers 60, Institute of Public Policy and Public Choice - POLIS.
    8. Gerard Turley & Darragh Flannery & Stephen McNena, 2015. "A Needs and Resources Assessment of Fiscal Equalisation in the Irish Local Government System," The Economic and Social Review, Economic and Social Studies, vol. 46(3), pages 459-484.
    9. Roy Bahl & Musharraf Cyan & Sally Wallace, 2011. "Challenge to Intergovernmental Fiscal Relations in Pakistan: The Revenue Assignment Dimension," Chapters, in: Jorge Martinez-Vazquez & François Vaillancourt (ed.), Decentralization in Developing Countries, chapter 4, Edward Elgar Publishing.
    10. Shah, Anwar, 2012. "Public services and expenditure need equalization : reflections on principles and worldwide comparative practices," Policy Research Working Paper Series 6006, The World Bank.
    11. World Bank, 2012. "Arab Republic of Egypt - Reshaping Egypt's Economic Geography : Domestic Integration as a Development Platform, Volume 1," World Bank Publications - Reports 11903, The World Bank Group.
    12. World Bank, 2012. "Reshaping Egypt's Economic Geography : Domestic Integration as a Development Platform," World Bank Publications - Reports 11869, The World Bank Group.
    13. Gustavo Canavire-Bacarreza & Nicolas Guadalupe Zuniga Espinoza, 2010. "Fiscal Transfers a Curse or Blessing? Evidence of Their Effect on Tax Effort for Municipalities in Sinaloa, Mexico," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1030, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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