Intergovernmental Transfers: The Funding Rule and Mechanisms
The paper categorizes different types of intergovernmental transfers, discusses the funding rule of grants, and outlines some principles for setting up transfer allocation mechanisms that respect hard budget constraints at the macroeconomic level. The mechanics of a neutral transfer scheme aiming at budget equalization is sketched using data for a fictional developing country, Krakozhia, which aims at implementing an incentive compatible methodology for allocating transfers to its provinces.
|Date of creation:||01 Nov 2004|
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