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Intergovernmental transfers and public sector expenditures: a game-theoretic approach

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  • Pablo Sanguinetti

Abstract

It is well known that the fiscal performance of a country is actually determined by the interaction of may fiscal authorities within the public sector. The purpose of this paper is to present a simple model that adopts a game-theoretic point of view to investigate the consequences of different modes of interaction between federal and provincial jurisdictions for the determination of the overall public sector expenditures and taxes. We motivate the theoretical exercises presenting evidence regarding the fiscal performance of Argentina in 1970-1987 where an ill-designed system of intergovernmental grants has been associated with increasing provincial government deficits and of public sector expenditures.

Suggested Citation

  • Pablo Sanguinetti, 1994. "Intergovernmental transfers and public sector expenditures: a game-theoretic approach," Estudios de Economia, University of Chile, Department of Economics, vol. 21(2 Year 19), pages 179-212, December.
  • Handle: RePEc:udc:esteco:v:21:y:1994:i:2:p:179-212
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    Citations

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    Cited by:

    1. Calvo, Guillermo A. & Vegh, Carlos A., 1999. "Inflation stabilization and bop crises in developing countries," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 24, pages 1531-1614 Elsevier.
    2. Nadir Habibi & Cindy Huang & Diego Miranda & Victoria Murillo & Gustav Ranis & Mainak Sarkar & Frances Stewart, 2001. "Decentralization in Argentina," Working Papers 825, Economic Growth Center, Yale University.
    3. Sanguinetti, Pablo & Tommasi, Mariano, 2004. "Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline," Journal of International Economics, Elsevier, vol. 62(1), pages 149-170, January.
    4. Jones, Mark P. & Sanguinetti, Pablo & Tommasi, Mariano, 2000. "Politics, institutions, and fiscal performance in a federal system: an analysis of the Argentine provinces," Journal of Development Economics, Elsevier, vol. 61(2), pages 305-333, April.
    5. Sebastian M. Saiegh & Mariano Tommasi, 1999. "Why is Argentina’s Fiscal Federalism so Inefficient? Entering the Labyrinth," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 169-209, May.
    6. Ernesto Stein, 1999. "Fiscal Decentralization and Government Size in Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 357-391, November.
    7. Weingast, Barry R., 2009. "Second generation fiscal federalism: The implications of fiscal incentives," Journal of Urban Economics, Elsevier, vol. 65(3), pages 279-293, May.
    8. Qian, Rong, 2012. "Why do some countries default more often than others ? the role of institutions," Policy Research Working Paper Series 5993, The World Bank.
    9. Sharma, Chanchal Kumar, 2004. "Decentralization Dilemma: Measuring the Degree and Evaluating the Outcomes," MPRA Paper 204, University Library of Munich, Germany, revised Nov 2005.
    10. Shah, Anwar, 2005. "Fiscal decentralization and fiscal performance," Policy Research Working Paper Series 3786, The World Bank.
    11. Ernesto H. Stein, 1998. "Descentralización fiscal y tamaño de los gobiernos en América Latina," Research Department Publications 4113, Inter-American Development Bank, Research Department.

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