Intergovernmental transfers and fiscal effort in Peruvian local governments
AbstractThe purpose of this paper is to identify the causal relationship between intergovernmental transfers and fiscal effort. Empirical evidence from Peruvian municipalities supports a negative relation. The substitution effect is decreasing on the level of municipalities’ expenditure and tends to disappear for high-expenditure localities. Given this phenomenon, devolving responsibilities to sub-national governments might reduce fiscal effort and deteriorate fiscal balance especially among localities with lower fiscal capacity. A possible solution might be the inclusion of fiscal effort indicators in the intergovernmental transfer design.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2108.
Date of creation: Oct 2005
Date of revision:
fiscal effort; intergovernmental transfers; fiscal decentralization; local taxation;
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-17 (All new papers)
- NEP-PBE-2007-03-17 (Public Economics)
- NEP-URE-2007-03-17 (Urban & Real Estate Economics)
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