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On the Political Determinants of Intergovernmental Grants in Decentralized Countries: The Case of Spain

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This paper studies the effect of political variables on the gains obtained by Spanish regions in periodical bargaining of the intergovernmental financing agreements and on the regional distribution of discretional earmarked grants over the period 1987-2008. First, we find that the relationship between gains in transferred revenues and on regional public debt stocks depends on the period and the specific issues discussed in the corresponding negotiation, aside from political affinity. Second, we show that the most discretional program of earmarked grants is strongly driven by electoral strategy. National incumbents tend to allocate intergovernmental transfers where there are competitive regional elections. Moreover, we show that earmarked grants are allocated in those regions where the incumbent performs better in national elections and, especially, in those where there are more seats to be won. Hence we prove that both strategies are complementary rather than exclusive.

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  • Pablo Simón-Cosano & Santiago Lago-Peñas & Alberto Vaquero, 2012. "On the Political Determinants of Intergovernmental Grants in Decentralized Countries: The Case of Spain," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1230, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper1230
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    1. Salvador Barrios & Diego Martínez-López, 2017. "Fiscal equalization schemes and subcentral government borrowing," Chapters, in: Naoyuki Yoshino & Peter J. Morgan (ed.), Central and Local Government Relations in Asia, chapter 4, pages 130-160, Edward Elgar Publishing.
    2. Daniel Aparicio-Pérez & Maria Teresa Balaguer-Coll & Emili Tortosa-Ausina, 2021. "Politics against Economics: The Case of Spanish Regional Financing," Working Papers 2021/15, Economics Department, Universitat Jaume I, Castellón (Spain).
    3. Kayode Taiwo & Linda G. Veiga, 2020. "Is there an “invisible hand” in the formula-based intergovernmental transfers in Nigeria?," NIPE Working Papers 02/2020, NIPE - Universidade do Minho.
    4. Andrés Rodríguez-Pose & Yannis Psycharis & Vassilis Tselios, 2016. "Politics and Investment: Examining the Territorial Allocation of Public Investment in Greece," Regional Studies, Taylor & Francis Journals, vol. 50(7), pages 1097-1112, July.
    5. Mar Delgado-Téllez & Javier J. Pérez, 2020. "Institutional and Economic Determinants of Regional Public Debt in Spain," Public Finance Review, , vol. 48(2), pages 212-249, March.
    6. Eduardo Bandrés & Alain Cuenca, 2016. "Las reformas de la financiación autonómica: elementos para una aproximación desde la economía política," Revista de Estudios Regionales, Universidades Públicas de Andalucía, vol. 1, pages 165-194.
    7. Santiago Lago-Peñas & Agnese Sacchi & Pablo Simon-Cosano, 2014. "Who honor the rules of federalism? Party system nationalization and fiscal performance," Working Papers. Collection A: Public economics, governance and decentralization 1409, Universidade de Vigo, GEN - Governance and Economics research Network.
    8. Javier J. Pérez & Rocío Prieto, 2015. "Risk Factors and the Maturity of Subnational Debt," Public Finance Review, , vol. 43(6), pages 786-815, November.
    9. Silvia Fresneda & Nuria Reguera & Fernando Casas, 2021. "De-agentification Process in Spanish Regional Governments," Hacienda Pública Española / Review of Public Economics, IEF, vol. 236(1), pages 39-64, March.
    10. Maria del Mar Delgado & Pablo Hernandez de Cos & Javier J. Pérez, 2017. "Institutional and economic determinants of Sub-national public debt in Spain," EcoMod2017 10518, EcoMod.

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    Keywords

    Intergovernmental grants; party systems; elections; subcentral public debt.;
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