Why Focus on Spending Needs Factors? The Political Economy of Fiscal Transfer Reforms in Mexico

Author/Editor: Ahmad, Ehtisham ; González Anaya, José Antonio ; Brosio, Giorgio ; Garcia-Escribano, Mercedes ; Lockwood, Ben ; Revilla, Ernesto
Publication Date: October 01, 2007
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: An equalization system ensures that subnational governments can provide similar level of public services at a comparable level of own tax-effort. This paper focuses on the importance of spending needs factors in the design of equalization transfers as well as special purpose transfers-and the role that this could have in setting the agenda for better accountability for recipient governments, illustrating both design and implementation questions with examples from Mexico. The paper also takes into account the difficult political economy constraints to reforming any system of transfers.
Series: Working Paper No. 07/252
Subject(s): Fiscal policy | Mexico | Government expenditures | Public sector | Economic reforms | Political economy

Author's Keyword(s): Intergovernmental fiscal relations | tranfers
Publication Date: October 01, 2007
Format: Paper
Stock No: WPIEA2007252 Pages: 28
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