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On the relation between central and sub-national government fiscal balances

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  • John Thornton

Abstract

Unbalanced panel least squares regression results (with fixed cross-section and period effects) suggest that changes in the fiscal balances of central and sub-national tiers of government in OECD countries tend to be highly positively correlated and that this partly reflects the existence of administrative controls and fiscal rules that govern central- and sub-national government fiscal relations. In contrast, cooperative institutional frameworks and reliance on market forces do not appear to have secured complementary fiscal adjustment at the sub-national tier of government.

Suggested Citation

  • John Thornton, 2009. "On the relation between central and sub-national government fiscal balances," Applied Economics Letters, Taylor & Francis Journals, vol. 16(6), pages 603-608.
    • Handle: RePEc:taf:apeclt:v:16:y:2009:i:6:p:603-608
    DOI: 10.1080/13504850601118260
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    References listed on IDEAS

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    1. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    2. de Mello, Luiz Jr, 2000. "Fiscal Decentralization and Intergovernmental Fiscal Relations: A Cross-Country Analysis," World Development, Elsevier, vol. 28(2), pages 365-380, February.
    3. Isabelle Joumard & Per Mathis Kongsrud, 2003. "Fiscal Relations across Government Levels," OECD Economic Studies, OECD Publishing, vol. 2003(1), pages 155-229.
    4. Julia Darby & V. Anton Muscatelli & Graeme Roy, 2005. "Fiscal consolidation and decentralisation: a tale of two tiers," Fiscal Studies, Institute for Fiscal Studies, vol. 26(2), pages 169-195, June.
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    Cited by:

    1. Heinemann, Friedrich & Moessinger, Marc-Daniel & Yeter, Mustafa, 2018. "Do fiscal rules constrain fiscal policy? A meta-regression-analysis," European Journal of Political Economy, Elsevier, vol. 51(C), pages 69-92.

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