Cover IMF Working Papers
Designing Sound Fiscal Relations Across Government Levels in Decentralized Countries
Author: Robin Boadway and Luc Eyraud
Series:
IMF Working Papers
Volume/Issue:
Volume 2018: Issue 271
Language:
English
Publication Date:
10 Dec 2018
DOI:
https://doi.org/10.5089/9781484387788.001
ISBN:
9781484387788
ISSN:
1018-5941
Pages:
44
Keywords:
WP; national government; infrastructure project; expenditure responsibility; government health; vertical gap; fiscal federalism; vertical imbalance; fiscal balance; state revenue; government policy; subnational government; revenue decentralization; government arrears; Public employment; Fiscal stance; Northern Europe; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (1.3 MB) Download Epub
This paper discusses how decentralized countries can achieve sound fiscal relations between the central government and lower government levels. The concepts of “vertical gap” and “vertical balance” provide an analytical framework for identifying and addressing key challenges. These concepts can help policymakers ensure that the financing of subnational governments (composed of transfers received from the center, own revenues, and borrowing) is both efficient and adequate given the allocation of spending responsibilities. More generally, the paper offers some perspectives about the optimal design of decentralization systems by examining the sequencing and economic principles underlying revenue and expenditure assignments, the use of transfers, and borrowing.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund