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Testing regional intergovernmental transfers asymmetries in Uruguay

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  • Muinelo-Gallo, Leonel
  • Azar, Paola

Abstract

In this paper we seek to complement the scarce empirical evidence for middle-income countries about the effects of unconditional central government transfers on subnational fiscal behaviour. To this end, we have used an unbalanced panel of 18 Uruguayan regional governments from 1991 to 2016. Our database includes data from the regional budget and other sources of information, which allows us to investigate the role of political economy factors. The application of panel data techniques with the use of instrumental variables highlights the presence of a sizeable flypaper effect and a significant role of variables related with the political economy design of sub-national finances.

Suggested Citation

  • Muinelo-Gallo, Leonel & Azar, Paola, 2018. "Testing regional intergovernmental transfers asymmetries in Uruguay," MPRA Paper 90245, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:90245
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    References listed on IDEAS

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    More about this item

    Keywords

    Fiscal federalism; Intergovernmental transfers; Flypaper effect; Endogeneity; Uruguay;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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