Partial fiscal decentralization and sub-national government fiscal discipline: empirical evidence from OECD countries

Asatryan, Zareh; Feld, Lars P.; Geys, Benny

doi:10.1007/s11127-015-0250-2

Cited by 41 publications

(41 citation statements)

References 25 publications

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“…However, this study also finds that expenditure decentralization has a negative impact on regional economic growth, but level of significance is weak. These findings align with the empirical evidence from the studies of fiscal decentralization and economic growth in OECD economies by Asatryan, Feld, & Geys (2015) and Blochliger and Akgun (2018), both of whom described that decentralization of tax revenues tends to have a stronger impact than spending decentralization and such evidence is more likely to occur in a smaller government. While intergovernmental transfers appeared to be associated with slower growth, both studies found that balanced decentralization is conducive to growth.…”

Section: Resultssupporting

confidence: 88%

Fiscal Decentralization and Economic Growth in Thailand: A Cross-Region Analysis

Nantharath¹,

Laochankham²,

Kamnuasilpa³

et al. 2019

IJFR

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Prior to the 1997 decentralization, over 90% of national revenue in Thailand were held at the central government and less than 10% of public expenditure were allocated to local governments across country. Lack of adequate revenue and access to sufficient expenditure budget has caused disparity and ineffectiveness of public services and economic development at the local level. This study examines the effects of the fiscal decentralization on the economic growth in Thailand from 2004 to 2017. The research methodology uses a cross panel data analysis across five provincial regions and considers revenue decentralization, expenditure decentralization, transfer dependency, and vertical fiscal imbalance as influential factors of growth. By applying Panel Fully Modified Least Squares (FMOLS) and Panel Dynamic Least Squares (DOLS) regression approaches, the study finds empirical evidence of positive effects of revenue decentralization, transfer dependency, and vertical fiscal imbalance on regional economic growth across five regions. However, this study also finds that expenditure decentralization has a negative impact on regional economic growth, but level of significance is weak. These findings suggest that the rapid increase in metropolis government expenditure budget following the years of political transition in 2006 and 2014 has caused stagnation in public investment at local level across country, thereby resulted in a lagged behind industrial output and gross provincial product. Lack of budget expenditures also weakens demand and stagnates growth in manufacturing, construction, and real estate activities, thereby rendering fiscal imbalances and development gaps in Thai economy.

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Section: Resultssupporting

confidence: 88%

Fiscal Decentralization and Economic Growth in Thailand: A Cross-Region Analysis

Nantharath¹,

Laochankham²,

Kamnuasilpa³

et al. 2019

IJFR

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“…In the wake of the 2008-2009 fi nancial crisis, more attention was also paid to the infl uence of local fi nances on the rising defi cits of general government sectors. A recent study confi rmed that greater fi scal autonomy involves stricter budgetary discipline (Asatryan et al, 2015).…”

Section: Post-crisis Trends In Researchmentioning

confidence: 99%

A Local Government Revenue System under Macroeconomic Pressure - The Case of Poland

Guziejewska¹,

Walerysiak-Grzechowska²

2020

Prague Economic Papers

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This study analyses macroeconomic factors, especially the level of GDP and its changes, in terms of their impact on the revenues of Polish local governments from 1999 to 2016. The importance of the factors in managing local finances is growing because of the increasing threats of globalisation and economies becoming more vulnerable to exogenous shocks. This article attempts to identify the structural weaknesses of the local government revenue system in Poland in the context of macroeconomic circumstances. It follows from our research that the property tax and general state grants are relatively insensitive to GDP changes and that they are capable of ensuring local revenue stability during a crisis. Greater sensitivity to economic fluctuations is shown by shared income taxes. The study analyses Central Statistical Office and Eurostat data using an advanced research approach, the key elements of which are cointegration analysis and a vector error correction model.

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“…On the other hand Asatryan at al. [13] found that that greater tax (revenue) decentralization is associated as well with improved sub-national government budget deficits/surpluses.…”

Section: (3) the Degree Of Fiscal Decentralizationmentioning

confidence: 99%

Subnational Fiscal Consolidation: The Hungarian Path from Crisis to Fiscal Sustainability in Light of International Experiences

Bethlendi

Lentner

2018

Sustainability

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The purpose of this study is to broaden the literature on the factors that contribute to the over-indebtedness of the subnational sector and the related crisis management tools based on the experience of Hungary. In addition to the phenomena known from the literature (vertical imbalance, the fiscal tightening of the central government, the weakness of central control and transparency, and local government-owned companies), non-standard factors also contributed to the evolution of a subnational fiscal crisis in Hungary. The Hungarian municipalities had, in practice, built up a carry trade position for speculative purposes, mostly from Swiss Franc funding. The other relevant observation based on experience is that, when significant amounts of central development funds fail to form a carefully considered development policy, over the long term they could undermine local fiscal stability. In addition to extraordinary fiscal transfer and full assignment of debts, the Hungarian subnational fiscal consolidation also involved a novel technique: the obligations were transferred to the state through the assumption of duties. In Hungary, in line with international experiences, central financial assistance was accompanied by increased fiscal control and by a tightening of the requirements for budgetary transparency and data reporting. Central approval for the assumption of new debts became an important element of fiscal sustainability. In addition to the above, this study argues that in political, social, and legal terms, credible no-bailout regimes do not offer an optimum solution for the subnational sector.

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Partial fiscal decentralization and sub-national government fiscal discipline: empirical evidence from OECD countries

Cited by 41 publications

References 25 publications

Fiscal Decentralization and Economic Growth in Thailand: A Cross-Region Analysis

Fiscal Decentralization and Economic Growth in Thailand: A Cross-Region Analysis

A Local Government Revenue System under Macroeconomic Pressure - The Case of Poland

Subnational Fiscal Consolidation: The Hungarian Path from Crisis to Fiscal Sustainability in Light of International Experiences

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