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Intergovernmental Transfers: The Vertical Sharing Dimension

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Author Info
Roy Bahl () (Andrew Young School of Policy Studies, Georgia State University)
Sally Wallace () (Andrew Young School of Policy Studies, Georgia State University)

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Abstract

There are two dimensions to the structure of an intergovernmental transfer: the vertical share and the horizontal share (Bahl and Linn, 19921). The vertical share is the total pool of funds to be allocated to subnational governments, while the horizontal shares are the amounts received by eligible local governments. Most research (and most political attention) is devoted to the latter. The subject of this paper is vertical sharing. We have three goals. The first is a quantitative analysis of trends and cross-country variations in vertical sharing. In particular, we are interested in what explains the vertical share and whether there has been an increase in the importance of intergovernmental fiscal transfers and in the question of what explains the cross-country variations in this importance. The second is a description of the range of the practice in vertical sharing. Finally, we offer some criteria by which the impact of vertical sharing might be evaluated.

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Publisher Info
Paper provided by International Studies Program, Andrew Young School of Policy Studies, Georgia State University in its series International Studies Program Working Paper Series, at AYSPS, GSU with number paper0419.

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Length: 43 pages
Date of creation: 01 Nov 2004
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Handle: RePEc:ays:ispwps:paper0419

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Related research
Keywords: Intergovernmental Transfers; Vertical Sharing Dimension; subnational government; local government;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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  1. Jorge Martinez-Vazquez & Jameson Boex, 1999. "Fiscal Decentralization in the Russian Federation During the Transition," International Studies Program Working Paper Series, at AYSPS, GSU paper9903, International Studies Program, Andrew Young School of Policy Studies, Georgia State University. [Downloadable!]
  2. Linda Andersson & Thomas Aronsson & Magnus Wikstr–m, 2004. "Testing for Vertical Fiscal Externalities," International Tax and Public Finance, Springer, vol. 11(3), pages 243-263, 05. [Downloadable!]
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  3. Michael Keen, 1997. "Vertical Tax Externalities in the Theory of Fiscal Federalism," IMF Working Papers 97/173, International Monetary Fund.
  4. Bev Dahlby, 1996. "Fiscal externalities and the design of intergovernmental grants," International Tax and Public Finance, Springer, vol. 3(3), pages 397-412, July. [Downloadable!] (restricted)
  5. Prud'homme, Remy, 1995. "The Dangers of Decentralization," World Bank Research Observer, Oxford University Press, vol. 10(2), pages 201-20, August.
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