Asymmetrical treatment and revenue from regional protest

This study seeks to empirically determine to what extent continual protest by regionalist parties may generate revenue for their regions. To this end, we perform an econometric estimation using the collaboration agreements between Spanish governments and the autonomous communities as the dependent variable (first-level political and administrative divisions, CCAA in their Spanish initials). We test our hypothesis by analogously applying the economic specifications employed in studies of "pork barrel politics", including control variables regarding per capita income, regional financing systems, political variables such as support for regional governments from the same political party or the existence of pivot parties. The results support the theoretical conclusions reached by Treisman (1999), namely that non-sovereignist regionalism generates revenue while sovereignist nationalism or regionalism leads governments to react by applying unfavourable treatment. Similarly, the fact that a regionalist party plays a key role in the investiture of the national president brings with it even greater revenue to the region in question, concurring with the results predicted by Brancati (2008)

Supranational Integration And National Reorganization

We explore the implications of European integration for scal decentralization in EU member states with a dataset on 21 OECD countries over the 1975-2000 period. The dierence-in-dierence methodology is used to establish causality. EU member states are classied as the treatment and non-EU OECD countries as the control group. The Maastricht treaty is interpreted as a quasi-experimental policy intervention that substantially advanced European integration. Our results suggest that tax decentralization has increased in EU countries after the signing of the Maastricht treaty. The treaty's eect on expenditure decentralization also seems to be positive, but is less clear-cut.Fiscal decentralization; Maastricht treaty; supranational integration; institutional change.

Is there an “invisible hand” in the formula-based intergovernmental transfers in Nigeria?

Intergovernmental transfers are susceptible to the tactical influence of the transfer-giving government notwithstanding the institution of a formula-based system under the control of an independent institutional body. This study explores the arrangement of intergovernmental transfers in Nigeria, where the formula-based system under the control of a constitutionally recognised body is in place, using the data from the year 2007 to the year 2016. The general conclusion from this study does not support equity considerations but rather tactical manipulation in intergovernmental transfers. Results suggest that states with poor fiscal capacity, especially the rural and less developed states, receive lower transfers per capita, contrary to equity considerations. There is evidence that transfers to states under the control of opposition parties and term-limited governors are lower. Additionally, transfers are strategically increased to all states during election periods possibly for the federal government’s political base enlargement and strengthening.This paper was financed by National Funds of the FCT — Portuguese Foundation for Science and Technology within the project "UID/ECO/03182/2019"

The impact of economic openness on the vertical structure of the public sector

The aim of this paper is to investigate the impact of economic openness on the vertical structure of the public sector within a country. To tackle this issue we set up a simple theoretical model of fiscal federalism, where both central and local public spending enter the objective functions of both a central government and an aggregate local public sector, accommodating a wide range of behaviours. The degree of economic openness is assumed to erode central tax revenues and through this channel to affect the size of central spending, the size of grants paid to local governments and the optimal amount of local public spending. Consequences on the degree of decentralization are investigated. The main findings are that for a large subset of parameters an increase in economic openness leads to: a) a lower level of central government expenditures; b) a lower level of general government expenditures; c) a higher level of local taxation; d) a higher degree of public sector decentralization.openness, decentralization, fiscal federalism, public sector, government size.

If you want me to stay, pay

Devolution of political power is constantly on the political agenda in both Italy and Spain. Fiscal policy in these countries has granted specific privileges to some regions. Valle d’Aosta/Vallée d’Aoste (VdA) and País Vasco/Euskadi (PV) have an extensive say over spending decisions, and receive nearly all regional tax revenues. Although both VdA and PV are among the richest regions in each country, both are net beneficiaries of the fiscal equalisation system. This preferential treatment is the outcome of a fiscal system with limits on taxing power and debt issuance, and is meant as a compensation for the lack of autonomy. It so prevents calls for more fiscal autonomy, or even outright secession. The economic effects of this asymmetric federalism are negative. Although partial equalisation reduces excessive redistribution built in the fiscal equalisation system, more autonomy could pay off with more efficient government. Asymmetric federalism moreover creates a political impasse in the negotiation of a more efficient tax system and financing arrangement.fiscal federalism, equalisation, secession, Valle d’Aosta, País Vasco. JEL classification:H70, H73, H77

Words or deeds – what matters? Experience of recentralization in Russian security agencies

Although decentralization is often modeled as an outcome of bargaining over rents and poli-cies, intuitively it seems possible that public statements, symbols and status often have a great impact on this process. The paper studies the relative importance of the “real” political actions versus the changes of symbolic nature in the bargaining over devolution and secession, using the unique laboratory of the personnel recentralization in the Russian security agencies in 2000-2007. While in the 1990s regional branches of federal ministries were mostly captured by regional governors, in 2000s Putin replaced the heads of agencies by new bureaucrats, cut-ting the connections to the region. The paper finds a robust influence of symbolic gestures made by regional governments in the earlier bargaining process on appointments, even if the actual devolution policies did not matter. Symbolic actions seem to play a crucial role in the decisions in this highly sensitive area.devolution; bargaining; fiscal federalism; transition economies

Constitutional reforms, fiscal decentralization and regional fiscal flows in Italy

In the last 15 years, Italy has been involved in a complex, confuse and unfinished process of fiscal decentralization. In this context, data on fiscal flows are continuously produced and thrown in the political arena by several actors, political parties, interest groups and media alike, with little scientific underpinnings and often with limited adherence to reality. This paper discusses at length the issue of fiscal federalism in Italy and presents a careful attempt to measure regional redistribution, or fiscal flows across regions. It describes the decentralization process in Italy from the beginning of the ‘90’s to date and presents a few data on the main features of the Italian decentralization process, that only happened on the financing side, with little effects on the allocation of expenditure responsibility between levels of governments. The focus is however on the measurement of regional fiscal flows and on the problems concerning the regionalization of public expenditure and revenues. Our basic conclusions can be summarised as follows. Fiscal flows in Italy are huge and are mostly driven by the large difference in economic development between the different areas of the country. The public sector generally works in the direction of equalizing per capita (current) public expenditure across regions, at least for fundamental services. However, the distance in economic development, and therefore in tax revenues among regions, is so large that even this partial equalization is enough to generate consistent fiscal flows across the national territory. Clearly, fiscal federalism has some chances of success in Italy only if it works in the direction of reducing the distance between territorial areas and the Italian debate on fiscal federalism, rich in ideology and poor in facts, would certainly benefit by an improved quality of regional data and by official estimations, based on clear and transparent methodology, of regional fiscal flows.fiscal federalism, net fiscal flows, regional redistribution

Supranational Integration And National Reorganization

We explore the implications of European integration for scal decentralization in EU member states with a dataset on 21 OECD countries over the 1975-2000 period. The dierence-in-dierence methodology is used to establish causality. EU member states are classied as the treatment and non-EU OECD countries as the control group. The Maastricht treaty is interpreted as a quasi-experimental policy intervention that substantially advanced European integration. Our results suggest that tax decentralization has increased in EU countries after the signing of the Maastricht treaty. The treaty's eect on expenditure decentralization also seems to be positive, but is less clear-cut

DECENTRALIZATION´S EFFECTS ON EDUCATIONAL OUTCOMES IN BOLIVIA AND COLOMBIA

The effects of decentralization on public sector outputs is much debated but little agreed upon. This paper compares the remarkable case of Bolivia with the more complex case of Colombia to explore decentralization´s effects on public education outcomes. In Colombia, decentralization of education finance improved enrollment rates in public schools. In Bolivia, decentralization made government more responsive by re-directing public investment to areas of greatest need. In both countries, investment shifted from infrastructure to primary social services. In both, it was the behavior of smaller, poorer, more rural municipalities that drove these changes.decentralization, education, public investment, Bolivia, Colombia, local government