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Narrowing Vertical Fiscal Imbalances in Four European Countries

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  • Izabela Karpowicz
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    Abstract

    This paper describes the institutional changes that have induced a decline in the vertical fiscal imbalance (VFI) - defined as the share of sub-national own spending not financed through own revenues - in four European countries: Belgium, Italy, Norway, and Spain. The decline in VFI was achieved through progressive devolution of revenues to sub-national governments in Belgium, Italy, and Spain, while re-centralization of health sector expenditures was the cause of the decline in the VFI in Norway.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 12/91.

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    Length: 22
    Date of creation: 01 Mar 2012
    Date of revision:
    Handle: RePEc:imf:imfwpa:12/91

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    Related research

    Keywords: Current account balances; Government expenditures; Intergovernmental fiscal relations; decentralization; fiscal decentralization; sub-national governments; federalism; fiscal balances; vertical fiscal imbalance; fiscal imbalance; expenditure decentralization; fiscal federalism; sub-national government; tax revenues; fiscal imbalances; fiscal performance; tax sharing; fiscal consolidation; vertical fiscal imbalances; subnational governments; intergovernmental transfers; recentralization; public spending; fiscal discipline; tax bases; budget constraints; tax competition; tax rates; fiscal balance; tax autonomy; local taxes; fiscal deficits; government spending; fiscal autonomy; fiscal equalization; fiscal policy; sub-national revenues; fiscal position; fiscal equalization mechanism; fiscal positions; public debt; tax base; fiscal outcomes; fiscal expansion; budget constraint; tax revenue; tax-sharing arrangement; fiscal affairs department; decentralization policies; fiscal mobility; national budget; expenditure restraint; expansionary fiscal policy; government fiscal deficits; fiscal decisions; debt service; subnational government; capital expenditure; sub-national entities; tax burden; fiscal flows; fiscal gap; government role; decentralization process; fiscal behavior; fiscal reforms; sub-national borrowing; intergovernmental fiscal; expansionary fiscal; revenue autonomy; expenditure policy; fiscal pressures; public finance; tax reform; decentralizations; fiscal profligacy; tax collection; fiscal implications; fiscal affairs; decentralization reforms; fiscal relations; taxation; public budget;

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    1. Luc Eyraud & Lusine Lusinyan, 2011. "Decentralizing Spending More Than Revenue," IMF Working Papers 11/226, International Monetary Fund.
    2. Guillem López & Joan Costa-Font & Ivan Planas, 2004. "Diversity and regional inequalities: Assessing the outcomes of the Spanish 'System of Health Care Services'," Working Papers, Research Center on Health and Economics 745, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Thushyanthan Baskaran, 2010. "On the link between fiscal decentralization and public debt in OECD countries," Public Choice, Springer, vol. 145(3), pages 351-378, December.
    4. Magnussen, Jon & Hagen, Terje P. & Kaarbøe, Oddvar M., 2006. "Centralized or decentralized? A case study of Norwegian hospital reform," Working Papers in Economics 02/06, University of Bergen, Department of Economics.
    5. Fiorino, Nadia & Ricciuti, Roberto, 2006. "Legislature size and government spending in Italian regions: forecasting the effects of a reform," POLIS Working Papers 69, Institute of Public Policy and Public Choice - POLIS.
    6. Isabelle Joumard & Tadashi Yokoyama, 2005. "Getting the Most Out of Public Sector Decentralisation in Japan," OECD Economics Department Working Papers 416, OECD Publishing.
    7. Molero, Juan Carlos, 2001. "Analysis Of The Decentralization Of Public Spending In Spain," MPRA Paper 8056, University Library of Munich, Germany.
    8. Isabelle Joumard & Claude Giorno, 2005. "Getting the Most Out of Public Sector Decentralisation in Spain," OECD Economics Department Working Papers 436, OECD Publishing.
    9. Roy Bahl & Sally Wallace, 2004. "Intergovernmental Transfers: The Vertical Sharing Dimension," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0419, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    10. Maria Flavia Ambrosanio & Massimo Bordignon & Floriana Cerniglia, 2008. "Constitutional reforms, fiscal decentralization and regional fiscal flows in Italy," DISCE - Quaderni dell'Istituto di Economia e Finanza ief0084, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    11. Lars-Erik Borge, 2006. "Centralized or decentralized financing of local governments? Consequences for efficiency and inequality of service provision," Working Paper Series 7806, Department of Economics, Norwegian University of Science and Technology.
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    Cited by:
    1. Eyraud, Luc & Lusinyan, Lusine, 2013. "Vertical fiscal imbalances and fiscal performance in advanced economies," Journal of Monetary Economics, Elsevier, vol. 60(5), pages 571-587.

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