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Fiscal responsibility laws for subnational discipline : the Latin American experience

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  • Webb, Steven B.
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    Abstract

    This paper discusses fiscal responsibility laws in Latin America, with special attention to their provisions for fiscal discipline by subnational governments. It discusses why and when such laws might be useful-to help resolve the coordination problem in getting diverse governments to avoid overusing the common national credit market and to help individual governments make a time-consistent commitment for fiscal prudence. It examines the cases of Brazil, Colombia, Peru, and Argentina, as well as the case of Mexico where other types of laws and regulations aim to achieve the same objectives of solidifying incentives for fiscal discipline at all levels of government. Fiscal responsibility laws are found to be useful in some cases, although the experience is not long enough to be certain, but they are clearly not necessary in every case, nor always sufficient to assure fiscal stability.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3309.

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    Date of creation: 01 May 2004
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    Handle: RePEc:wbk:wbrwps:3309

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    Related research

    Keywords: Urban Economics; Banks&Banking Reform; Public&Municipal Finance; Public Sector Economics&Finance; National Governance; National Governance; Banks&Banking Reform; Public Sector Economics&Finance; Urban Economics; Public&Municipal Finance;

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    1. Mariano Tommasi & Miguel Braun, 2002. "Fiscal Rules for Subnational Governments. Some Organizing Principles and Latin American Experiences," Working Papers 44, Universidad de San Andres, Departamento de Economia, revised Mar 2002.
    2. Mariano Tommasi & Mark P. Jones & Pablo Sanguinetti, 1997. "Politics, Institutions and Public Sector Spending in the Argentine Provinces," Working Papers 17, Universidad de San Andres, Departamento de Economia, revised Jan 1999.
    3. Juan Jose Echavarria & Carolina Renteria & Roberto Steiner, 2002. "Decentralization and Bailouts in Colombia," Research Department Publications 3138, Inter-American Development Bank, Research Department.
    4. Dillinger, William & Webb, Steven B., 1999. "Fiscal management in federal democracies : Argentina and Brazil," Policy Research Working Paper Series 2121, The World Bank.
    5. William Dillinger & Steven B. Webb, 1999. "Fiscal management in federal democracies: Argentina and Brazil," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(3), pages 423-483.
    6. Henning Bohn & Robert P. Inman, . "Balanced Budget Rules and Public Deficits: Evidence from the U.S. States (Reprint 060)," Rodney L. White Center for Financial Research Working Papers 10-96, Wharton School Rodney L. White Center for Financial Research.
    7. Henning Bohn & Robert P. Inman, 1996. "Balanced Budget Rules and Public Deficits: Evidence from the U.S. States," NBER Working Papers 5533, National Bureau of Economic Research, Inc.
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    Cited by:
    1. World Bank, 2008. "Brazil - Toward a More Inclusive and Effective Participatory Budget in Porto Alegre : Volume 1. Main report," World Bank Other Operational Studies 6275, The World Bank.
    2. World Bank, 2008. "Brazil : Toward a More Inclusive and Effective Participatory Budget in Porto Alegre, Volume 1. Main Report," World Bank Other Operational Studies 8042, The World Bank.
    3. Roy Bahl & Eunice Heredia-Ortiz & Jorge Martinez-Vazquez & Mark Rider, 2005. "India: Fiscal Condition of the States, International Experience,and Options for Reform: Volume 1," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper05141, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Jonas Frank, 2010. "Towards a Fiscal Pact : The Political Economy of Decentralization in Bolivia," World Bank Other Operational Studies 12737, The World Bank.

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