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Fiscal responsibility laws for subnational discipline : the Latin American experience

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  • Webb, Steven B.

Abstract

This paper discusses fiscal responsibility laws in Latin America, with special attention to their provisions for fiscal discipline by subnational governments. It discusses why and when such laws might be useful-to help resolve the coordination problem in getting diverse governments to avoid overusing the common national credit market and to help individual governments make a time-consistent commitment for fiscal prudence. It examines the cases of Brazil, Colombia, Peru, and Argentina, as well as the case of Mexico where other types of laws and regulations aim to achieve the same objectives of solidifying incentives for fiscal discipline at all levels of government. Fiscal responsibility laws are found to be useful in some cases, although the experience is not long enough to be certain, but they are clearly not necessary in every case, nor always sufficient to assure fiscal stability.

Suggested Citation

  • Webb, Steven B., 2004. "Fiscal responsibility laws for subnational discipline : the Latin American experience," Policy Research Working Paper Series 3309, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3309
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    References listed on IDEAS

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    1. Dillinger,William R. & Webb,Steven Benjamin, 1999. "Fiscal management in federal democracies : Argentina and Brazil," Policy Research Working Paper Series 2121, The World Bank.
    2. Juan José Echavarría Soto & Carolina Rentería & Roberto Steiner, 2000. "Decentralization and Bailouts in Colombia," INFORMES DE INVESTIGACIÓN 002252, FEDESARROLLO.
    3. William Dillinger & Steven B. Webb, 1999. "Fiscal management in federal democracies: Argentina and Brazil," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(3), pages 423-483.
    4. Mark P. Jones & Pablo Sanguinetti & Mariano Tommasi, 1999. "Politics, Institutions, and Public-Sector Spending in the Argentine Provinces," NBER Chapters,in: Fiscal Institutions and Fiscal Performance, pages 135-150 National Bureau of Economic Research, Inc.
    5. Bohn, Henning & Inman, Robert P., 1996. "Balanced-budget rules and public deficits: evidence from the U.S. states," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 13-76, December.
    6. Henning Bohn & Robert P. Inman, "undated". "Balanced Budget Rules and Public Deficits: Evidence from the U.S. States (Reprint 060)," Rodney L. White Center for Financial Research Working Papers 10-96, Wharton School Rodney L. White Center for Financial Research.
    7. Mariano Tommasi & Miguel Braun, 2002. "Fiscal Rules for Subnational Governments. Some Organizing Principles and Latin American Experiences," Working Papers 44, Universidad de San Andres, Departamento de Economia, revised Mar 2002.
    8. Rosenblatt, David & Webb, Steven B & González, Christian Y, 2003. "Stabilizing intergovernmental transfers in Latin America: a complement to national," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34927, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    Cited by:

    1. Yener Altunbaş & John Thornton, 2017. "Why Do Countries Adopt Fiscal Rules?," Manchester School, University of Manchester, vol. 85(1), pages 65-87, January.
    2. World Bank, 2008. "Brazil - Toward a More Inclusive and Effective Participatory Budget in Porto Alegre : Volume 1. Main report," World Bank Other Operational Studies 6275, The World Bank.
    3. Lili Liu, 2009. "Turkey," World Bank Other Operational Studies 26063, The World Bank.
    4. Lee J. Alston & Marcus André Melo & Bernardo Mueller & Carlos Pereira, 2006. "Political Institutions, Policymaking Processes and Policy Outcomes in Brazil," IDB Publications (Working Papers) 3365, Inter-American Development Bank.
    5. World Bank, 2008. "Brazil : Toward a More Inclusive and Effective Participatory Budget in Porto Alegre, Volume 1. Main Report," World Bank Other Operational Studies 8042, The World Bank.
    6. Roy Bahl & Eunice Heredia-Ortiz & Jorge Martinez-Vazquez & Mark Rider, 2005. "India: Fiscal Condition of the States, International Experience,and Options for Reform: Volume 1 (2005)," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper05141, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    7. José Roberto Rodrigues Afonso & Erika Amorim Araújo & Geraldo Biasoto Júnior, 2015. "Fiscal Space and Public Sector Investments in Infrastructure: a Brazilian Case-Study," Discussion Papers 0161, Instituto de Pesquisa Econômica Aplicada - IPEA.
    8. Carlos Scartascini & Ernesto H. Stein & Emmanuel Abuelafia & Sergio Berensztein & Miguel Braun & Luciano Di Gresia & Lee J. Alston & Marcus André Melo & Bernardo Mueller & Carlos Pereira & Mauricio Cá, 2009. "Who Decides the Budget? A Political Economy Analysis of the Budget Process in Latin America," IDB Publications (Books), Inter-American Development Bank, number 87294 edited by Mark Hallerberg & Carlos Scartascini & Ernesto H. Stein, February.
    9. Carlos Scartascini & Pablo T. Spiller & Ernesto H. Stein & Mariano Tommasi & Lee J. Alston & Marcus André Melo & Bernardo Mueller & Carlos Pereira & Cristóbal Aninat & John Londregan & Patricio Navia , 2011. "El juego político en América Latina: ¿Cómo se deciden las políticas públicas?," IDB Publications (Books), Inter-American Development Bank, number 42118 edited by Carlos Scartascini & Pablo T. Spiller & Ernesto H. Stein & Mariano Tommasi, February.
    10. Jonas Frank, 2010. "Towards a Fiscal Pact : The Political Economy of Decentralization in Bolivia," World Bank Other Operational Studies 12737, The World Bank.
    11. John Thornton, 2009. "Do fiscal responsibility laws matter? Evidence from emerging market economies suggests not," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(2), pages 127-132.
    12. repec:idb:idbbks:332 is not listed on IDEAS

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