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Fiscal stability during the Great Recession: putting decentralization design to the test

Santiago Lago-Peñas, Jorge Martinez-Vazquez, Agnese Sacchi
2019 Figshare  

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This paper provides an empirical analysis aimed at disentangling the roles played by decentralization level and design as well as the extended decentralized framework provided by subnational borrowing rules and fiscal responsibility laws on a country's fiscal stability. Using Organisation for Economic Co-operation and Development (OECD) countries' data from the period 1995–2014, strong regularities are found regarding the effects of decentralization, even during the recent Great Recession.
more » ... r levels of fiscal decentralization have a beneficiary effect on fiscal performance, but the positive impact erodes rapidly with the level of vertical fiscal imbalance. Other fiscal institutions shaping decentralization design, such as borrowing and other fiscal rules, can also contribute to foster fiscal stability.
doi:10.6084/m9.figshare.9034058 fatcat:nzutscsgzfbmbfswel4642ljeq
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Santiago Lago-Peñas, Jorge Martinez-Vazquez, Agnese Sacchi. "Fiscal stability during the Great Recession: putting decentralization design to the test." Figshare (2019)