How Should Subnational Government Borrowing Be Regulated? Some Cross-Country Empirical Evidence

Author/Editor:

Alexander Plekhanov ; Raju J Singh

Publication Date:

March 1, 2005

Electronic Access:

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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:

Countries have adopted various institutional responses to subnational government borrowing. Using a sample of 44 countries 1982-2000, this paper provides a panel data analysis to determine the most effective borrowing constraints for containing local fiscal deficits. The results suggest that no single institutional arrangement is superior under all circumstances. The appropriateness of specific arrangements depends upon other institutional characteristics, particularly the degree of vertical fiscal imbalance, the existence of any bailout precedent, and the quality of fiscal reporting.

Series:

Working Paper No. 05/54

Subject:

English

Publication Date:

March 1, 2005

ISBN/ISSN:

9781451860733/1018-5941

Stock No:

WPIEA2005054

Format:

Paper

Pages:

33

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