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Intergovernmental Relations and Fiscal Discipline

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  • Guiseppe Pisauro
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    Abstract

    Fiscal decentralization is likely to entail a bias in the budget process toward higher public expenses and deficits. The paper reviews lessons drawn from the theoretical literature and international experience on the design of intergovernmental relations. The institutional setup should address the dual problem of "common tax resources" and "soft" budget constraints, where policies devised to correct one problem may exacerbate the other. An approach based on full tax autonomy of lower-tier governments and reliance on market discipline, not supplemented by self-imposed constitutional limits, is not advisable. More effective seems to be a cooperative approach with some preeminence granted to the central government.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 01/65.

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    Length: 30
    Date of creation: 01 May 2001
    Date of revision:
    Handle: RePEc:imf:imfwpa:01/65

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    Related research

    Keywords: Fiscal management; Government expenditures; Taxation; Budgets; Intergovernmental fiscal relations; budget constraint; fiscal discipline; fiscal federalism; budget process; fiscal relations; intergovernmental fiscal; decentralization; budget rules; fiscal policy; budgetary institutions; fiscal gap; budget institutions; fiscal decentralization; tax revenues; fiscal rules; public finance; budget constraints; budget deficits; fiscal restraint; public expenditure; fiscal autonomy; public finances; fiscal transparency; government deficit; fiscal imbalance; local taxes; vertical fiscal imbalance; fiscal targets; fiscal crisis; government grants; fiscal policies; fiscal position; public budget; fiscal behavior; tax bases; budget discipline; intergovernmental transfers; central fiscal; fiscal authority; fiscal council; budgetary policies; budgetary process; fiscal affairs department; government revenue; excessive deficit procedure; budgetary system; local revenues; fiscal responsibilities; public finance literature; budget plans; budget systems; fiscal stabilization; fiscal crises; public debt; fiscal restraints; government budgeting; government budget; state budget; fiscal consolidation; fiscal affairs; central government budget; fiscal outcomes; budget revenues; budget requirements; budgeting process; fiscal performance; debt service; budget balance; government finance; fiscal institution; resource allocation; fiscal policy decisions; national budget; fiscal authorities; fiscal responsibility; contingent liabilities; fiscal deficits; budget size; tax effort; budget rule; fiscal programs; financial management; budgetary procedures; ordination of budgets; debt obligations; structural fiscal; expenditure levels; public spending; tax burden; fiscal stability; local budgets; fiscal reforms; budget deficit; level of indebtedness; formal fiscal restraints; fiscal institutions; fiscal power; budget implementation; tax revenue; budget execution; sector budget; fiscal coordination; tax policy; government liabilities; budget transactions; fiscal instruments; local fiscal crisis; fiscal balance; expenditure cuts; fiscal performances; local public finances; fiscal problems; budget balances; central government debt; public deficits; actual expenditure; fiscal constraints; government spending; fiscal shocks;

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