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The global crisis and intergovernmental relations: Revisiting the centralisation-decentralisation debate ten years on

Author

Listed:
  • Luiz de Mello
  • João Tovar Jalles

Abstract

There is a growing empirical literature on the effects of the global financial and economic crisis on intergovernmental relations. This paper contributes to this literature by focusing on conventional budgetary aggregates and institutional indicators of subnational authority in policymaking and fiscal-financial management. The empirical analysis is carried out for a large set of advanced and emerging-market/developing economies between 1990 and 2015 and shows that the crisis has been associated with an increase in the subnational shares of general government spending and revenue. The findings for subnational authority over policy and fiscal-financial management are more nuanced and suggest that increases in government indebtedness (spending) since the crisis have been associated with greater (weaker) subnational authority. It is possible that the need to deliver debt reductions through medium-term fiscal consolidation calls for greater intergovernmental coordination, which enhances the bargaining power of the subnational jurisdictions to broaden their prerogatives in fiscal matters and influence national policymaking.

Suggested Citation

  • Luiz de Mello & João Tovar Jalles, 2018. "The global crisis and intergovernmental relations: Revisiting the centralisation-decentralisation debate ten years on," Working Papers. Collection A: Public economics, governance and decentralization 1803, Universidade de Vigo, GEN - Governance and Economics research Network.
  • Handle: RePEc:gov:wpaper:1803
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    File URL: http://infogen.webs.uvigo.es/WP/WP1803.pdf
    File Function: First version, 2018
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    References listed on IDEAS

    as
    1. Arzaghi, Mohammad & Henderson, J. Vernon, 2005. "Why countries are fiscally decentralizing," Journal of Public Economics, Elsevier, vol. 89(7), pages 1157-1189, July.
    2. Dan Stegarescu, 2005. "Public sector decentralisation: measurement concepts and recent international trends," Fiscal Studies, Institute for Fiscal Studies, vol. 26(3), pages 301-333, September.
    3. Dan Stegarescu, 2009. "The effects of economic and political integration on fiscal decentralization: evidence from OECD countries," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 694-718, May.
    4. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
    5. Panizza, Ugo, 1999. "On the determinants of fiscal centralization: Theory and evidence," Journal of Public Economics, Elsevier, vol. 74(1), pages 97-139, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    federalism; decentralisation; intergovernmental relations.;

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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