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Fiscal Rules and Federalism as Determinants of Budget Performance

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  • Isabel Argimón
  • Pablo Hernández de Cos

Abstract

This article analyses the role of different potential determinants on the fiscal results of the Spanish regions (RGs). The empirical analysis suggests several conclusions. First, the fiscal rule in force between 1992 and 1998 does not appear to have had a significant effect on the fiscal balances of the autonomous regions. With regard to the degree of fiscal autonomy, a higher level in this variable is associated with a more disciplined behavior by RGs. The results also show that the greater transfer of tax revenues to the RGs, associated with a greater devolution of power, has generated greater dependency of fiscal performance on the economic cycle. There is also a strong inertial component in the implementation of fiscal policy in RGs.

Suggested Citation

  • Isabel Argimón & Pablo Hernández de Cos, 2012. "Fiscal Rules and Federalism as Determinants of Budget Performance," Public Finance Review, , vol. 40(1), pages 30-65, January.
  • Handle: RePEc:sae:pubfin:v:40:y:2012:i:1:p:30-65
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    Cited by:

    1. Salvador Barrios & Diego Martínez-López, 2017. "Fiscal equalization schemes and subcentral government borrowing," Chapters,in: Central and Local Government Relations in Asia, chapter 4, pages 130-160 Edward Elgar Publishing.

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