Fiscal Consolidation and Decentralisation: A Tale of Two Tiers

This paper contributes to the established literature on fiscal consolidations by investigating the distinct behaviour of central and sub-central tiers of government during general government consolidation attempts. In the light of different degrees of decentralisation across OECD countries, and the...

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Veröffentlicht in:Fiscal studies 2005-06, Vol.26 (2), p.169-195
Hauptverfasser: Darby, Julia, Muscatelli, V. Anton, Roy, Graeme
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creator Darby, Julia
Muscatelli, V. Anton
Roy, Graeme
description This paper contributes to the established literature on fiscal consolidations by investigating the distinct behaviour of central and sub-central tiers of government during general government consolidation attempts. In the light of different degrees of decentralisation across OECD countries, and the different responsibilities devolved to sub-central tiers, we believe that this approach offers an illuminating insight into the analysis of fiscal consolidations and their success. We show that the involvement of the sub-central tiers of government is crucial to achieving cuts in expenditure, particularly in relation to the overall size of the government wage bill. In addition, central governments appear to exert a strong influence on the expenditure of sub-central tiers through their grant allocations, and control of these allocations appears to have a considerable impact upon the overall success of consolidation attempts. Finally, we demonstrate that there is a skewness in cuts towards sub-central capital expenditure both when central governments cut grant allocations and when sub-central governments engage in lone consolidation attempts.
doi_str_mv 10.1111/j.1475-5890.2005.00009.x
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source PAIS Index; Access via Wiley Online Library; JSTOR Archive Collection A-Z Listing
subjects Capital expenditures
Central-local government relations
Consolidation
Data analysis
Decentralization
E62
E65
Economic development
Empirical research
Fiscal policy
Government
Government expenditures
Government spending
Governmental reform
Gross domestic product
H1 11
H77
National budget
Political power
Public expenditure
Public finance
Regression analysis
Revenue
Skewness
Studies
Success
Tax rates
Tax revenues
Total revenue
Working papers
title Fiscal Consolidation and Decentralisation: A Tale of Two Tiers
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