Narrowing Vertical Fiscal Imbalances in Four European Countries

IMF Working Papers, March 1, 2012

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Paper describes institutional changes that induced a decline in the vertical fiscal imbalance (VFI) — defined as "the share of sub-national own spending not financed through own revenues" — in four European countries: Belgium, Italy, Norway, and Spain.
Decline in VFI was achieved through progressive devolution of revenues to sub-national governments in Belgium, Italy, and Spain.
Decline in VFI in Norway was driven by re-centralization of health sector expenditures.

Belgium: VFI decline associated with progressive devolution of revenues to sub-national governments.
Italy: VFI decline associated with progressive devolution of revenues to sub-national governments.
Spain: VFI decline associated with progressive devolution of revenues to sub-national governments.
Norway: VFI decline associated with re-centralization of health sector expenditures.

Subjects: Expenditure, Fiscal policy, Fiscal stance, Health, Health care, Health care spending, Revenue administration
Keywords: AC status, aggregate VFI, aggregate VFI., central government, decentralization, Europe, Federalism, fiscal balance, Fiscal stance, government, government autonomy, Health care, Health care spending, local governments, Northern Europe, regime ACs, revenue devolution, vertical fiscal imbalance, VFI indicator, WP

IMF Working Paper: "Narrowing Vertical Fiscal Imbalances in Four European Countries" (Izabela Karpowicz, March 1, 2012).

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