Too Small to Fail? Subnational Spending Pressures in Europe
IMF Working Papers, February 25, 2013
Source details
- Canonical URL
- Too Small to Fail? Subnational Spending Pressures in Europe
Other formats
Bibliographic details
- Authors: Marialuz Moreno Badia
- Published: February 25, 2013
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475578157.001
Summary and research questions
- Purpose: to assess whether expenditure decentralization has contributed to weakening fiscal performance in Europe.
- Empirical setup: panel of EU15 countries for the period 1995-2011.
- Core research questions:
- (1) Does the form of spending decentralization affect the general government fiscal balance?
- (2) Is there evidence of spending duplication?
- (3) Are soft budget constraints prevalent at the subnational level in Europe?
Methods
- Estimation: three econometric models applied to the EU15 panel (1995-2011).
- Data coverage and bibliographic identifiers:
- Pages: 36
- Volume: 2013
- Issue: 046
- Series: Working Paper No. 2013/046
- DOI: https://doi.org/10.5089/9781475578157.001
- Stock No: WPIEA2013046
- ISBN: 9781475578157
- ISSN: 1018-5941
- Author and date:
- By Marialuz Moreno Badia
- February 25, 2013
Key findings
- Current decentralization models may have shortcomings with respect to fiscal performance in Europe.
- Identified phenomena addressed by the paper:
- Spending duplication at subnational and central levels.
- Prevalence (or assessment) of soft budget constraints at the subnational level.
- Links between the form of spending decentralization and the general government fiscal balance.
Policy implications and recommended improvements
- Efforts to achieve fiscal consolidation would require improvements in three areas:
- Better matching subnational spending and revenues.
- Reshaping some expenditure assignments to reduce overlap.
- Improving the effectiveness of institutional arrangements at the subnational level.
Subject classification and keywords
- Subject: Expenditure, Fiscal federalism, Fiscal policy, Fiscal rules, Fiscal stance, General government spending, Public financial management (PFM)
- Keywords: EU, Europe, expenditure control failure, expenditure decentralization, expenditure management, expenditure overlap, expenditure pressure, expenditure rule, fiscal balance, fiscal federalism, fiscal performance, Fiscal rules, Fiscal stance, General government spending, government increase, local governments, national government, WP
Too Small to Fail? Subnational Spending Pressures in Europe, IMF Working Paper No. 2013/046, Marialuz Moreno Badia, February 25, 2013.