The effect of sub-national borrowing control on fiscal sustainability: How to regulate?
AbstractThis article examines effectiveness of sub-national borrowing control regimes in maintaining overall fiscal sustainability. The results suggest that regulating sub-national borrowing based on fiscal rules performs most efficiently in maintaining fiscal consolidation. Furthermore, sole reliance on financial markets seems to lead to faster end of fiscal consolidation episodes, which may be explained by not fully developed financial markets in many countries that dominantly apply this approach, Finally, strong central government control, as in case of administrative and cooperative regimes, in presence of high fiscal dependence on central government financing seem to increase the probability of ending consolidation episodes.
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Bibliographic InfoPaper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2010/36.
Length: 41 pages
Date of creation: 2010
Date of revision:
Sub-national borrowing; fiscal sustainability; panel data;
Find related papers by JEL classification:
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
- H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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