A practitioner's guide to intergovernmental fiscal transfers

Intergovernmental fiscal transfers are a dominant feature of subnational finance in most countries. They are used to ensure that revenues roughly match the expenditure needs of various orders (levels) of subnational governments. They are also used to advance national, regional, and local area objectives, such as fairness and equity, and creating a common economic union. The structure of these transfers creates incentives for national, regional, and local governments that have a bearing on fiscal management, macroeconomic stability, distributional equity, allocative efficiency, and public services delivery. This paper reviews the conceptual, empirical, and practice literature to distill lessons of policy interest in designing the fiscal transfers to create the right incentives for prudent fiscal management and competitive and innovative service delivery. It provides practical guidance on the design of performance-oriented transfers that emphasize bottom-up, client-focused, and results-based government accountability. It cites examples of simple but innovative grant designs that can satisfy grantors'objectives while preserving local autonomy and creating an enabling environment for responsive, responsible, equitable, and accountable public governance. The paper further provides guidance on the design and practice of equalizationtransfers for regional fiscal equity as well as the institutional arrangements for implementation of such transfer mechanisms. It concludes with negative (practices to avoid) and positive (practices to emulate) lessons from international practices.Public Sector Economics&Finance,Intergovernmental Fiscal Relations and Local Finance Management,Public Sector Management and Reform,Public&Municipal Finance,Urban Economics

The realization of the detailed local plans in urban areas in Turkey: a model

The main objective of the realization of local physical plan in urban areas is to constitute the healthy urban structure, to provide land development and to regulate the use of private and public land for public interest. The other important objective is to prevent sprawl of city and chaotic growth. The realization of local physical plan is a process which it express the change in an urban area from irregular plots of rural land to urban plots having infrastructure according to local physical plans. The municipalities are responsible for the realization of local physical urban plans in Turkey. There is not any sufficient research related to realization of local physical plans in urban spaces throughout the Turkey. The purpose of this study is to investigate whether there is a relationship between the realization rate of local physical plans and population, population growth rate, socio-economic index, the number of technical personnel, some dummy variables. For this research, a sample survey method is used and 468 questionnaires are completed by Planning Office of the municipalities of urban areas in Turkey. In this model, the index of realization local physical plan are used as a dependent variable and population, population growth rate, global density in urban areas according to detailed plans, adequacy of budgets, socio-economic index, the number of personnel, Multiple Regression Model is utilized for Turkey. The results of the paper can be used to identify the problems concerning the realization of local physical plans and to suggest solutions to these problems based on existing legislation in Turkey in international context.

Quality of Life in Buenos Aires Neighborhoods: Hedonic Price Regressions and the Life Satisfaction Approach

This paper studies quality of life in urban neighborhoods in the Buenos Aires Metropolitan Area. First, hedonic price regressions for residential prices are augmented with neighborhood characteristics, based on a real estate database with indicators on each property’s distance to public facilities and amenities, and on a smaller survey with greater detail. Second, following recent developments in the field of happiness research, the document assesses the importance of different neighborhood characteristics on quality of life by interacting objective and subjective indicators. Indices of quality of life related to local amenities are derived for the different neighborhoods for both the hedonic regression and life satisfaction approaches. The results indicate a strong but not perfect correlation between real estate prices, income levels and neighborhood characteristics, suggesting scope for welfare-improving policy interventions.

Regulation of intercommunal financial flows with geostatistics and GIS

Concerning the characterisation or classification of municipalities a wide range of different approaches exists. Usually some historical, functional, and/or political indicators are used for such a classification. These indicators are usually structured simple, referring to inhabitant size, political importance, configuration of available infrastructure like hospitals and schools, places of work, or the like. However, an application field, where a quite specific, meaningful, and comprehensible classification for each municipality is of fundamental interest, is the local financial adjustment between communities on the same hierarchical administrative level. Which municipality delivers gladly more money than it is forced to do by law, or which community renounces voluntarily external support? Therefore, well elaborated indicators are needed to define the amount of money which has to be transferred, generally spoken, from rich communities to the poorer ones. However, it is obvious that a pure redistribution of revenues between financially strong and financially weak communities, which would lead in principle to a more or less equal financial configuration of the communities, is not sufficient for a fair system of financial adjustment. Such a redistribution system would not consider the different financial loads of the budgets of different types of communes. These varying financial loads for varying types of commues can be characterised by the following two concepts: 'costs of width' and 'costs of density'. The 'costs of width' are explained mainly by geographical reasons for peripheral and/or mountainous communities with low population density, which implies specific financial load for the particular community. By contrast, 'costs of density' are explained by disproportional high socio-demographic burdens and high costs of infrastructure in central and urban communities. Meaningful indicators for such a financially oriented classification of municipalities need detailed investigations, to be silent completely of that these indicators also need political acceptance, in the end. This paper presents a study carried out for the Canton of Zurich, Switzerland, which made part of the cantonal revision of the system of inter-communal financial adjustment. The aim was to provide means for a cantonal regulation on how the financial adjustment between the communities should be regulated. Therefore, socio-demographic and geographic indicators have been evaluated in order to find rules to reflect the financial load of the municipal budgets. The heuristically driven statistical modelling has been carried out using multiple regression. Besides the presentation of the technical approach, this paper discusses the analysed indicators in the perspective of regional policy and territorial justice.

Complementarity analysis of the Priority Areas Development Program and the Priority Attention Areas Program in the National Crusade Against Hunger Program in indigenous municipalities in the State of Veracruz Mexico

Mexico, with the commissioning of the "National Crusade Against Hunger Program" in 2013, aimed at serving the population that presents both extreme poverty and food deprivation. The article aims to analyze whether the criterion of the selection of the municipalities of the State of Veracruz incorporated in the National Crusade Against Hunger Program (PNCH) show complementarity with the efforts in the fight against poverty in the social expenditure strategy applied in the Priority Attention Zones Program (ZAP) and the Priority Areas Development Program (PDZP) and, particularly, the indigenous municipalities that have a greater degree of social exclusion. The adjustment of a binary logistic regression model is presented, in order to assess the incidence of contextual factors to interpret the scope of the strategy adopted by the federal government in the fight against poverty and hunger. As a result, it is evident that there is no continuity in the fight against poverty, since the municipalities included in the strategy Priority Areas of Attention and Program of Development of Priority Zones are not considered in the selection of municipalities incorporated in the National Program of Crusade Against Hunger, a situation that identifies the relationship between programs is not complementary

The Determinants of Intergovernmental Grants in Portugal: a Public Choice Approach

We use a large and unexplored dataset covering all mainland Portuguese municipalities from 1979 to 2001 to evaluate the impact of political forces in the allocation of grants from the central government to local authorities. Empirical results clearly show that, besides variables that proxy the social and economic development of municipalities, political variables also condition the granting system: (1) grants increase in municipal and legislative election years; (2) the larger the number of years a mayor has been in office the larger the amount of funds transferred to his municipality; (3) municipalities ruled by mayors that belong to the prime-minister’s party are favored in the grants distribution process. Keywords: grants, intergovernmental relations, public choice, Portugal JEL classification: H77, D72, D78