Blockchain Papers

Xiaobo Zhang

No abstract is available for this record.

Roy Bahl, Sally Wallace

The widespread adoption of fiscal decentralization laws during the past 25 years can be mostly tracked to economic efficiency gains and nation‐building objectives. Subnational governments (SNGs) in industrialized countries account for about twice the share of total government expenditures as in developing countries. Transition countries also assign more expenditure responsibilities to SNGs than do the developing countries. There has been little growth in the SNG expenditure or tax shares over the past three decades. We confirm the basic hypotheses that the SNG expenditure share is significantly higher in countries with higher incomes, larger populations, and a lower degree of corruption.

Oliver Koppel

No abstract is available for this record.

von Schà ⁄ tz, Ulrike Stierle

In the process of economic integration regional production structures are about to change. Several studies analysed already trends of regional specialization in the European Union and attempted to figure out determinants of observed changes. In this context, up to date the role of the public sector and especially the impact of different fiscal designs as determinants of the change in production structures have been left aside. Advantages and shortcomings of decentralized government organization have been largely discussed theoretically within the last decades. Several empirical studies attempted to examine the impact of decentralization on national performance, e.g. economic growth and fiscal stability. This paper aims at linking these two subjects and analyzes the empirical relationship between regional specialization and fiscal decentralization for a panel of 15 Member States of the European Union, controlling for regional and other institutional determinants. The analysis shows that rather autonomous regions tend to diverse their production structure in order to insure against adverse supply shocks.

Werner Güth, Vittoria Levati, Rupert Sausgruber

No abstract is available for this record.

Joseph J. Capuno

This paper attempts to trace and find evidence for the linkages between the quality of governance, and development at the local level since the adoption of the fiscal decentralization policy in the Philippines in 1991. The concern since then over the links has been prompted by the observed persistent imbalances in local development - across and within regions - which many believe is due to the less than prudent exercise of the devolved powers and responsibilities - hence, low quality of local governance. To be sure, the decentralization has led to not a few innovations in local service delivery and financing, and in increased people's participation in local civic activities. However, the spread of innovation has been slow and there has been less than genuine participation in the mandated local special bodies. The uneven quality of local governance thus may have contributed to imbalanced regional growth. Evidence also indicate that the initial level of economic conditions determine the acceptable quality of local governance, which explains why certain poor areas remain in the vicious circle of penury and misgovernance. To help improve the quality of local governance, some policy inputs are suggested.

Julio López Laborda, Carlos Monasterio Escudero

This chapter provides an overview of the key issues in public economics arising from the process of territorial decentralisation that has taken place in Spain since the restoration of democracy and the Constitution of 1978, and which resulted in the emergence of the “Autonomic State”. The first section focuses on the assignment of competencies between central and regional levels of government and explains in some detail the methodology used to quantify the “effective cost” of the services devolved to the Autonomous Communities (hereinafter ACs). We have paid special attention to health services, which is the most significant item for regional budgets in quantitative terms. The second section deals with revenue assignment, transfers and borrowing, and describes the two systems established to finance regional expenditure. These are the “common system” (régimen común) applied in the majority of the ACs and the “charter system” (régimen foral), which is based on the historical rights accorded to the Basque Country and Navarre. The last section appraises the decentralisation process and notes some emerging issues of debate.

Shawn D. Knabb, Christiana Stoddard

ABSTRACT Cross-country studies of education and economic prosperity often reach conflicting results when using growth rates as the measure of economic development. However, growth rates lack persistence over time and may not accurately measure long-term economic success over relatively short economic horizons. To overcome this potential specification problem, we estimate the relationship between key education variables and the capital to physical labor ratio. Using both cross-sectional and panel specifications, we find that both the primary-pupil–teacher ratio and decentralized education finance are associated with a larger capital to physical labor ratio. The relationship between human capital and expenditures, private education, and test scores are less robust.

Thomas Döring

In the last 40 years, in public finance the examination of spatial aspects of federalism and intergovernmental fiscal relations was dominated by allocative and distributional issues. Modern growth theory and complementary approaches lead to a shift in the research perspective. Against this background the paper discusses how the findings of modern growth theory can affect the design of intergovernmental fiscal relations. The results of this analysis can be summarized as follows: (1) the existence of a geographically different growth dynamic provides an additional justification for a decentralization of political competences. (2) To cover more exactly the regional economic backward and forward linkages, especially local government authorities should intensify their cooperative behavior. (3) From the perspective of economic growth, the equalizing effect of horizontal transfers between decentralized jurisdictions should be limited.

Jon H. Fiva, Jørn Rattsø

Decentralization of government with property tax financing is the standard recipe for public sector reform. Fiscal competition is assumed to stimulate efficiency and hold down the tax level. Property taxation offers additional incentives for efficiency. We study the incentive mechanisms involved using data for decentralized governments and in a setting where they can choose to have property taxation or not. The empirical analysis addresses whether fiscal competition and political control problems influence the choice of having property taxation. The results indicate that both incentive mechanisms are relevant and consequently support the standard advice. Fiscal competition generates a distinct geographic pattern in local taxation and political fragmentation seems to motivate property taxation to control common pool problems. The main methodological challenge handled concerns spatial interaction with discrete choice.

Grzegorz Bywalec

In the literature on the subject of economy there are three functions of public finance
\ndescribed: stabilazing, redistributing and allocating. Effectiveness of realization of the abovementioned
\nfunctions depends to a large extent on the political system of a given country,
\nespecially on the degree to which it is decentralized. In the article the author embarks on an
\nattempt to identify the advantages and disadvantages of decentralization of particular public
\nfinance functions and in effect to show which of the functions can be more effectively realized
\nby the central authorities and which of them can be decentralized that is transfered to the
\nlocal authorities.

Nelson Chalfun

O trabalho discute, do ponto de vista economico, as vantagens e desvantagens que diferentes graus de centralizacao/descentralizacao fiscal e tributaria apresentam para um crescimento economico equilibrado. Para tanto, sao apresentadas as posicoes defendidas pelos centralistas e descentralistas, autores que, baseados nos resultados de suas pesquisas, tendem a se aproximar de um ou de outro polo, no continuum do sistema politico federalista, os primeiros sustentando a concentracao do poder de tributar e de gastar nas maos do governo central, e os ultimos defendendo a devolucao desses poderes ao nivel de governo o mais distante possivel do centro. O trabalho comeca apresentando as relacoes entre o Federalismo e as estruturas tributaria e fiscal; em seguida coloca a polemica entre as duas correntes mencionadas, concluindo com a indicacao dos temas de uma agenda de pesquisa voltada para o estabelecimento de uma estrutura fiscal e tributaria adequada aos paises em desenvolvimento, uma vez que muito da literatura sobre o tema esta voltada para os problemas dos paises desenvolvidos.Abstract This paper provides a discussion, in economic grounds, of the advantages and disadvantages that different degrees of fiscal and tax centralization/decentralization pose towards achieving a balanced economic growth. Accordingly, it introduces arguments and contentions of both centralist and decentralist authors. Based on their research outcomes they reveal a tendency towards a polarized position within the continuum of the political system of federalism. Whereas the former group sustains the concentration of taxation and spending powers at the federal level, the latter advocates the devolution of such powers to the level of government the most afar from the center. The paper starts presenting the relationships between Federalism and fiscal and tax structures; then it analyses the arguments posed by members of the two streams of thought and concludes proposing specific themes to compose a discussion agenda devised towards the institution of fiscal and tax structures specifically designed to fulfill particular characteristics of developing countries, given that most of the literature is based on the experience of developed countries. Key words: Public goods. Public finance. State and local taxation. State and local budget and expenditures. Intergovernmental relations. Federalism

Frederico G. Jayme, Marco Crocco

This paper aims at analyzing regional development in Brazil regarding its financial conditions. It departs from the features of the federalism and decentralization in Brazil, as well as the state and local expenditures. We intends to investigate the role of the federalism and decentralization after the recentralization of taxes and budget in Brazilian economy. Conclusions highlight the importance of financial sector as one of the influential aspects of regional imbalances in Brazil.

Zhen Zhang

This paper estimates the contributions of the strength of fiscal decentralization and the local preferential policies to the difference performances of private enterprises with the data from Zhejiang and Shanxi provinces.Our main discoveries are: the local governments which are differentiated by fiscal decentralization have contributions to the performance of the local private enterprises,but not so remarkable as expected.In the transition of local government's policies,tax and financing policies are more important.This conclusion indicates that an efficient executive system which can guarantee the contracts between government and enterprises is more practical than the preferential policy itself.

Luciano Greco

Ces trente dernières années, le fédéralisme fiscal s'est imposé comme une priorité dans le calendrier des réformes institutionnelles de nombreux pays. L'idée que le fédéralisme fiscal soit un mécanisme porteur d'efficacité - bien que controversée tant sur le plan théorique qu'empirique - en a grandement influencé la diffusion. L'examen de l'économie des réformes fédérales se fonde sur trois questions : comment attribuer d'une façon optimale les pouvoirs publics aux divers niveaux de gouvernement ? Comment les forces de la concurrence et de la coordination interviennent-elles dans les relations intergouvernementales ? Comment les comportements des entreprises et des ménages limitent-elles les politiques économiques décentralisées ? Les dynamiques économiques, institutionnelles et politiques semblent déterminer les objectifs et la structure optimale du fédéralisme fiscal. Toutefois ce rôle crucial a été négligé dans la théorie traditionnelle du fédéralisme fiscal. Les théories économiques de l'information et la politique économique ont fortement contribué à l'amélioration de la compréhension de ces processus. A partir de ces développements de la recherche, notre travail met en lumière les enjeux du design optimal du fédéralisme fiscal. Tout d'abord, l'argument économique considérant le fédéralisme fiscal comme un mécanisme porteur d'efficacité dépend strictement de l'hypothèse de constitution incomplète : l'information incomplète joue un rôle important par rapport à cet argument à condition qu'elle soit considérée dans un contexte de constitution incomplète. Ensuite, la dynamique de la décentralisation des pouvoirs (c.-à-d. e pluribus unum -dans le cas de fédérations et confédérations consolidées dans le temps- ou e pluribus unum -dans un contexte de dévolution des pouvoirs) modèle la distribution de l'information et, à son tour, la structure optimale des relations intergouvernementales. Enfin, les caractéristiques économiques des fonctions et des services publics décentralisés (par ex. la substituabilité entre services publics et privés) influencent la structure optimale des programmes publics gérés par les gouvernements locaux aussi bien que leur capacité de les financer.

Jianfeng Wang

The world is experiencing dramatic fiscal reconstruction in the socialist and (former) socialist countries and of continuing and fascinating evolution of government structure elsewhere. Being one of the fastest growing economies over the past nearly three decades, China seems deeply embracing this global mantra of power devolution in her effort to energize local economy that was suffocated in the highly constricted state-planning system. The literature of the Chinese central-local studies suggests that fiscal decentralization from the central government to provincial governments is a key institutional factor to explain Chinese economic success. However, the literature misses various lower levels of government in China. Has the fiscal power been eventually trickled down to them? This is the question addressed in this project. This project makes several contributions to the thriving Chinese central-local study. It brings back the missing local governments in the intergovernmental debate. By linking various local governments with the national government, the findings in this project help to draw a more comprehensive and holistic picture of the intergovernmental fiscal relations in China. Such a study on the evolution of fiscal structure among local governments also adds knowledge to understand the broad economic and administrative transformation in contemporary China. Using the latest datasets of public finance, this project performs a series of statistical analysis to understand if fiscal decentralization has taken place to each level of Chineselocal governments in the reform era. This project also tests the factors that have been widely identified in the classical welfare theory as explanative factors for the fiscal arrangement at different levels of local government. This project finds out that fiscal decentralization fails to capture the main trend of the intergovernmental fiscal relations at various Chinese local governments. Instead, there has been a rather consistent pattern of fiscal centralization across those local governments during the 1990s and the early 2000s.

Wu Yin

This paper argues that the fiscal risks in China are caused and accumulated by institutional deficiency, imperfection and unequilibrium, and hence institutional explanatory factors should be considered as endogenous variables to quantify fiscal risks. Four variables, the rate of nationalization (GYHL), the rate of marketization (SCH), the rate of public finance decentralization (CZFQ) and the rate of transaction (JYFY) are employed to explain fiscal risks (CZFX). Through stepwise regression, we find that GYHL and CZFQ impose significant effects on CZFX, and there is a negative relationship between GYHL and CZFX. Based on empirical research, the conclusions can be stated as follows: not only should we carry out SOEs reform well on micro-level, but also we should control the range and limits of public finance decentralization in order to avoid and diversify fiscal risks to some extent.

Xiaobo Zhang

While, politically speaking, China has a centralized government structure with strong top-down mandates, under the country’s current fiscal system, local governments are responsible for providing most local public goods and services. Large differences in economic structures and revenue bases exist, however, causing the implicit tax rate and fiscal burdens in support of local government functions to vary significantly across jurisdictions. Regions initially endowed with a broader nonfarm tax base do not need to rely heavily on new and existing firms to finance public goods provision, which creates a healthy investment environment in support of nonfarm sector growth. In contrast, local governments in regions where agriculture is the major economic activity spend the majority of their resources on their own operating costs, leaving little for public investment. Because of the relatively high transaction costs associated with collecting taxes from the agricultural sector, local governments tend to levy the existing nonfarm sector heavily, thereby greatly inhibiting its growth. As a result, regional differences in economic structures and fiscal dependent burdens may translate into widening gaps in equality. Authors' Abstract

Rosario G. M Anasan

Twelve years into the implementation of the Local Government Code of 1991, it is but opportune to assess how the key features of this landmark legislation has contributed to (or detracted from) achieving the balance between local autonomy and accountability. The literature on fiscal decentralization suggests that these two goals are not incompatible. In fact, real autonomy (in the sense of subnational governments being able to link their spending decisions with their revenue/tax decisions) promotes fiscal responsibility. In the context of the ongoing debate in the Philippines, however, local autonomy has been equated (by many LGUs officials) with the independence of LGUs from central government interference. As such, LGU officials have focused more on securing even higher levels of block grants in order to address the widely perceived vertical fiscal imbalance. However, closer scrutiny of the problem indicates that greater tax decentralization, coupled with a well-designed intergovernmental transfer system that includes elements of fiscal equalization and categorical grants conditional on the achievement of minimum service standards, would better enhance the gains that are forthcoming from the decentralization process while minimizing the risks of macro-instability.

A. Chernyavsky, Karen Vartapetov

By employing the methodology developed by the OECD the paper assesses the degree of revenue decentralization in Russia in comparison with other post-communist European countries. The paper provides theoretical arguments underpinning fiscal decentralization, analyzes the composition of subnational government revenues, the level of regional and local tax autonomy and types of intergovernmental fiscal transfers. The analysis presents the composition of revenues depending on the degree of subnational and local government control. In comparison with other transition countries fiscal decentralization in Russia is relatively low. It is concluded that Russia's public finance reform has not progressed towards providing greater fiscal autonomy for regional and local governments.

Silvia Rezessy, Konstantin Dimitrov, Diána Ürge-Vorsatz, Seth Baruch

No abstract is available for this record.

Dele Olowu

For a variety of reasons, many developing countries especially since the 1990s have embarked on programmes of democratic decentralization that are aimed at creating local self-governing systems that are democratic, relatively autonomous and effective in delivering services.Finding independent sources of financing for these emerging, locally based organs of governance has been one of the central challenges that confront these efforts in most countries.The literature suggests that sources of independent local government revenue are few in poor countries.As a result, most countries design decentralization programmes that depend heavily on intergovernmental transfers from national to local governments.Given widespread poverty that exists in most developing countries, this is a crucial strategy.However, the problem is that many central governments are engulfed in a systemic financial crisis and are desperately exploring strategies for reducing their expenditure commitments.One outcome is that revenue transfers are often irregular or fall much below the levels of expenditure decentralization, leading to serious fiscal gaps at the local level.Even where transfers are adequate and reliable, a fiscal regime which compels local actors to depend so heavily on central financial arrangements for practically all of their expenditure requirements undermines the development of lateral (local state-citizen) rather than vertical (central-local state) relations within the state, with serious implications for public participation and effective accountability.In the meantime, cities of developing countries continue to grow phenomenally in a way that makes conventional strategies for financing urban infrastructures unsustainable.Many analysts view this rapid urbanization as fatally aggravating the problem of urban/local governance.This paper suggests a different and more positive view.It reviews the literature which concedes that property taxation remains largely untapped and might indeed be progressive in developing countries.This literature highlights mainly the technical constraints to progress-assessment, valuation and collection.In contrast, this paper contends that the tax suffers from a combination of political and technical factors where the latter are dependent not independent variables.The paper undertakes an analysis of the key stakeholders in implementing successful property taxation policies based on research conducted in four countries-India, Nigeria, Republic of South Africa and Zimbabwe in the early 1990s.The paper suggests that willingness, opportunity and capacity remain critical factors and demonstrates how opposition to the tax can be overcome by strategic partnerships between central and local governments, public and private and domestic and external actors.

Kellee S. Tsai

No abstract is available for this record.

Nikos Benos

This paper studies the general equilibrium implications of two types of educa-tion policy in an overlapping generations growth model with second-best policy. We examine vouchers, which augment inherited private education spending, and public investment on economy-wide human capital, that provides economy-wide externalities to individual human capital accumulation. The government deter-mines jointly the allocation of tax revenues among the two types of education policy and tax policy, subject to the competitive decentralized equilibrium. Using plausible parameter values it is shown that it is socially optimal to spend heavily on economy-wide human capital accumulation and finance government spending by a modest proportional tax on initial human capital and a low tax on inherited private education expenditures.