How Should Subnational Government Borrowing Be Regulated? Some Cross-Country Empirical Evidence
March 1, 2005
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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.
Subject: Budget planning and preparation, Expenditure, Fiscal policy, Fiscal stabilization, Fiscal stance
Keywords: government, WP
Pages:
33
Volume:
2005
DOI:
Issue:
054
Series:
Working Paper No. 2005/054
Stock No:
WPIEA2005054
ISBN:
9781451860733
ISSN:
1018-5941
