IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Currency Pegs and Fiscal Federalism

  • Maria Laura Alzua
Registered author(s):

    This paper studies the different economic configurations that may give rise to incomplete fiscal decentralization, with the vertical imbalance problem associated to it. Particularly, we look at an economy which has given up monetary policy and cannot monetize national or sub-national government deficits. The question is whether dollarization is a commitment enough to discipline sub-national governments. Do incentives for Central Government bailouts disappear with dollarization? Does incomplete fiscal decentralization arises in equilibrium? We obtain two different sets of equilibria as result of a game between national and sub-national governments according to the difference parameter configuration. In one of them the Central Government will give taxing autonomy to the sub-national governments while in the other it will keep the taxing authority because it is optimal to do so. In this sense, the economy gets stuck in an inefficient level of fiscal decentralization. The model may apply to economies like Argentina, Ecuador, the CFA in Africa and Eastern European countries willing to join the Euro.

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Paper provided by Econometric Society in its series Econometric Society 2004 Latin American Meetings with number 205.

    in new window

    Date of creation: 11 Aug 2004
    Date of revision:
    Handle: RePEc:ecm:latm04:205
    Contact details of provider: Phone: 1 212 998 3820
    Fax: 1 212 995 4487
    Web page:

    More information through EDIRC

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:ecm:latm04:205. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.