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Fiscal Autonomy of Sub-Central Governments

Author

Listed:
  • Hansjörg Blöchliger

    (OECD)

  • David King

    (Stirling University)

Abstract

State and local governments in OECD countries have access to a variety of fiscal resources. Discretion over these resources varies considerably, and so does sub-central governments’ power to shape public service delivery. The design of fiscal autonomy affects sub-central government’s behaviour and determines outcomes like public sector efficiency, equity in access to public services or the long term fiscal stance. This paper provides data and interpretation on the fiscal resources of sub-central government in OECD countries. It presents a set of fiscal autonomy indicators such as revenue and expenditure decentralisation, tax autonomy, intergovernmental grants and the stringency of fiscal rules. In sum, the statistics show that taxes are still the most significant revenue source for subcentral governments but that only a part is under their effective control. Fiscal autonomy is further reduced by a high percentage of earmarked grants. The design of fiscal federalism varies considerably across countries, and factor analysis reveals almost no correlation between different fiscal autonomy indicators. Indeed, “fiscal autonomy” appears to have several dimensions.

Suggested Citation

  • Hansjörg Blöchliger & David King, 2006. "Fiscal Autonomy of Sub-Central Governments," OECD Working Papers on Fiscal Federalism 2, OECD Publishing.
  • Handle: RePEc:oec:ctpaab:2-en
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    File URL: http://dx.doi.org/10.1787/5k97b127pc0t-en
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    Citations

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    Cited by:

    1. Mario Jametti & Marcelin Joanis, 2016. "Electoral Competition as a Determinant of Fiscal Decentralisation," Fiscal Studies, Institute for Fiscal Studies, pages 285-300.
    2. Izabela Karpowicz, 2012. "Narrowing Vertical Fiscal Imbalances in Four European Countries," IMF Working Papers 12/91, International Monetary Fund.
    3. Richard M. Bird, 2012. "Subnational Taxation in Large Emerging Countries: BRIC Plus One," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1201, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Luc Eyraud & Lusine Lusinyan, 2011. "Decentralizing Spending More Than Revenue; Does it Hurt Fiscal Performance?," IMF Working Papers 11/226, International Monetary Fund.
    5. Barrios, Salvador & Martínez–López, Diego, 2016. "Fiscal Equalization Schemes and Subcentral Government Borrowing," ADBI Working Papers 595, Asian Development Bank Institute.
    6. repec:aic:jopafl:y:2012:j:1:cigue is not listed on IDEAS
    7. Stefan Voigt & Lorenz Blume, 2012. "The economic effects of federalism and decentralization—a cross-country assessment," Public Choice, Springer, vol. 151(1), pages 229-254, April.
    8. Johann Bröthaler & Michael Getzner, 2011. "Fiscal Autonomy and Total Government Expenditure: An Austrian Case-study," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(2), pages 134-156, May.
    9. Salvador Barrios & Diego Martínez-López, 2017. "Fiscal equalization schemes and subcentral government borrowing," Chapters,in: Central and Local Government Relations in Asia, chapter 4, pages 130-160 Edward Elgar Publishing.
    10. Kamurase, Alex & Wylde, Emily & Hitimana, Stephen & Kitunzi, Anka, 2012. "Rwanda - Social safety net assessment," Social Protection and Labor Policy and Technical Notes 91577, The World Bank.
    11. Bernard Dafflon, 2013. "Voluntary amalgamation of local governments: the Swiss debate in the European context," Chapters,in: The Challenge of Local Government Size, chapter 8, pages 189-220 Edward Elgar Publishing.

    More about this item

    Keywords

    fiscal autonomy; fiscal federalism; intergovernmental transfers; local taxation;

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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