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The Spending Power of Sub-Central Governments: A Pilot Study

Author

Listed:
  • Steffen Bach
  • Hansjörg Blöchliger

    (OECD)

  • Dominik Wallau

Abstract

This pilot study presents indicators that assess sub-central government (SCG) spending power by policy area. Traditional indicators – such as the share of SCG in total government spending – are often misleading as they underestimate the impact of central government regulation on sub-central spending patterns. In order to gauge true spending power, a set of institutional indicators is established, based on a detailed assessment of institutional, regulatory and administrative control central government exerts over various SCG policy areas. Results tend to confirm the limited discretion of SCGs over their own budget. Education in particular – the main SCG budget item in most countries – is strongly shaped by central government regulation. Federal countries tend to grant more spending power to SCGs than unitary countries. With a few amendments, the framework of this study could be applied to all OECD countries, although it is advisable to restrict the analysis to the main sub-central spending areas. L'autonomie budgétaire des administrations infranationales : un avant-projet Cet avant-projet présente des indicateurs pour évaluer l’autonomie budgétaire des administrations infranationales (AI). Les indicateurs traditionnels – tels que la part des dépenses des AI dans les dépenses totales – sont souvent trompeurs car ils sous-estiment l’influence de la réglementation mise en place par le gouvernement central sur la ventilation des dépenses infra-nationales. Afin d’estimer la véritable autonomie des AI, un ensemble d’indicateurs a été développé sur la base d’une analyse détaillée du pouvoir institutionnel, réglementaire et administratif que le gouvernement central exerce sur les politiques menées par les AI. Les résultats tendent à confirmer que les AI disposent d’une autonomie limitée sur leurs propres dépenses. L’éducation en particulier – souvent le poste budgétaire le plus important des AI – est un domaine fortement modelé par le gouvernement central. Les pays fédéraux tendent à garantir une autonomie budgétaire plus élevée à leurs AI que les pays unitaires. En l’adaptant légèrement, le cadre de cette étude pourrait être appliqué à tous les pays membres de l’OCDE, bien qu’il soit recommandé de limiter l’analyse aux domaines principaux de l’action publique.

Suggested Citation

  • Steffen Bach & Hansjörg Blöchliger & Dominik Wallau, 2009. "The Spending Power of Sub-Central Governments: A Pilot Study," OECD Economics Department Working Papers 705, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:705-en
    DOI: 10.1787/223123781022
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    Cited by:

    1. Kopańska Agnieszka, 2018. "Partial Fiscal Decentralization and Local Government Spending Policy," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 14(3), pages 21-31, September.
    2. Dubravka Jurlina Alibegovic, 2014. "Fiscal Autonomy ? Opportunity or Limitation for Innovative Local Development in Croatia?," ERSA conference papers ersa14p945, European Regional Science Association.
    3. Gülşen Kum, 2017. "Heat Waves in the City of Gaziantep in Turkey," European Journal of Multidisciplinary Studies Articles, Revistia Research and Publishing, vol. 2, September.
    4. Ms. Izabela Karpowicz, 2012. "Narrowing Vertical Fiscal Imbalances in Four European Countries," IMF Working Papers 2012/091, International Monetary Fund.
    5. Mr. Luc Eyraud & Ms. Lusine Lusinyan, 2011. "Decentralizing Spending More Than Revenue: Does it Hurt Fiscal Performance?," IMF Working Papers 2011/226, International Monetary Fund.
    6. Mr. Luc Eyraud & Ms. Marialuz Moreno Badia, 2013. "Too Small to Fail? Subnational Spending Pressures in Europe," IMF Working Papers 2013/046, International Monetary Fund.
    7. Mbanda, Vandudzai & Bonga-Bonga, Lumengo, 2019. "Municipal infrastructure spending capacity in South Africa: a panel smooth transition regression (PSTR) approach," MPRA Paper 91499, University Library of Munich, Germany.
    8. Agnieszka Kopańska, 2016. "Partial decentralization and its influence on local governments’ spending policy. An analysis of spending for teachers and other resources needed for schools," Working Papers 2016-38, Faculty of Economic Sciences, University of Warsaw.
    9. Christine Fauvelle-Aymar, 2014. "The welfare state, migration, and voting rights," Public Choice, Springer, vol. 159(1), pages 105-120, April.
    10. Bernard F. Couttolenc, 2012. "Decentralization and Governance in the Ghana Health Sector," World Bank Publications - Books, The World Bank Group, number 9376, December.
    11. Michael Klien & Hans Pitlik & Matthias Firgo & Ulrike Famira-Mühlberger, 2020. "Ein Modell für einen strukturierten vertikalen Finanzausgleich in Österreich," WIFO Studies, WIFO, number 65854, April.

    More about this item

    Keywords

    autonomie budgétaire; collectivités territoriales; fiscal federalism; fédéralisme fiscal; local government; spending autonomy;
    All these keywords.

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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