End of the line: The Effects of Intergovernmental Grants on Local Revenue: Evidence from Chile
AbstractThis paper presents research on the effect of intergovernmental grants on local government revenue in Chile. Intergovernmental grants are endogenous and I exploit a kink in a component of the Chilean formula for resource distribution for a panel of 340 Chilean municipalities from 1990 to 2007. I find empirical evidence that for Chilean municipalities, intergovernmental grants have a negative effect on local revenue. Specifically, an increase in per capita grant amount of one standard deviation is associated with a decrease of between 0.25 and 0.32 standard deviations in local per capita revenue. This effect is not uniform for different kinds of local revenue.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 393.
Date of creation: 2010
Date of revision:
Fiscal decentralization; intergovernmental grants; local government revenue; local collection; regression kink design;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H39 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Other
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
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