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Intergovernmental Transfers: The Vertical Sharing Dimension

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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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File URL: http://icepp.gsu.edu/sites/default/files/documents/icepp/wp/ispwp0419.pdf
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Bibliographic Info

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

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

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

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References

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  1. Jorge Martinez-Vazquez & Jameson Boex, 1999. "Fiscal Decentralization in the Russian Federation During the Transition," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. Andersson, Linda & Aronsson, Thomas & Wikström, Magnus, 2001. "Testing for Vertical Fiscal Externalities," UmeÃ¥ Economic Studies 573, Umeå University, Department of Economics.
  3. Prud'homme, Remy, 1995. "The Dangers of Decentralization," World Bank Research Observer, World Bank Group, vol. 10(2), pages 201-20, August.
  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.
  5. Michael Keen, 1997. "Vertical Tax Externalities in the Theory of Fiscal Federalism," IMF Working Papers 97/173, International Monetary Fund.
  6. M Govinda Rao, 1999. "Principles of Intergovernmental Transfers:Have the Finance Commissions Followed Them?," Working Papers 47, Institute for Social and Economic Change, Bangalore.
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Cited by:
  1. Roy Bahl & Geeta Sethi & Sally Wallace, 2009. "West Bengal: Fiscal Decentralization to Rural Governments: Analysis and Reform Options," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0907, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. Luc Eyraud & Lusine Lusinyan, 2011. "Decentralizing Spending More Than Revenue," IMF Working Papers 11/226, International Monetary Fund.
  3. Izabela Karpowicz, 2012. "Narrowing Vertical Fiscal Imbalances in Four European Countries," IMF Working Papers 12/91, International Monetary Fund.
  4. Gu, Gyun Cheol, 2012. "Developing Composite Indicators for Fiscal Decentralization: Which Is The Best Measure For Whom?," MPRA Paper 43032, University Library of Munich, Germany.
  5. World Bank, 2007. "China : Improving Rural Public Finance for the Harmonious Society," World Bank Other Operational Studies 7664, The World Bank.

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