Fiscal descentralization and the quality of government: evidence from panel data

In this paper we focus on the relationship between fiscal decentralization and government quality. In a sample of 29 developing and developed countries over the period 1984-1997, fiscal decentralization has a positive effect on institutional quality but this effect diminishes as countries become wealthier. Moreover, the positive effect of fiscal decentralization on government quality is reduced by electoral and decision-making decentralization in poor and medium income countries whereas these forms of decentralization seem to improve the impact of fiscal decentralization on government quality in rich countries.Quality of government, fiscal decentralization, political decentralization, panel data

Economic Growth and Inequality: The Role of Fiscal Policies

This paper analyses the impact of different instruments of fiscal policy on economic growth as well as on income inequality, using an unbalanced panel of 43 upper-middle and high income countries for the period 1972-2006. We consider and estimate two individual equations explaining growth and inequality in order to assess the incidence of different fiscal policies. Firstly, our approach considers imposing orthogonal assumptions between growth and inequality in both equations, and secondly, it allows growth to be included in the inequality equation, and inequality to be included in the growth equation. The empirical results suggest that an increase in the size of government measured through current expenditures and direct taxes diminishes economic growth while reducing inequality, being public investment the only fiscal policy that may break this trade-off between efficiency and equity, since increases in this item reduces inequality without harming output. Therefore, the results reflect that the trade-off between efficiency and equity that governments often confront when designing their fiscal policies may be avoided.fiscal policy, inequality, growth, panel data models

On the regional impact of public capital formation in spain

The objective of this paper is to investigate, in a methodologically consistent manner, the regional effects of public capital formation and the possible existence of regional spillover effects in Spain. The empirical results are based on VAR estimates at both the aggregate and regional levels using output, employment, and private capital, as well as different measures of public capital. Empirical results suggest that public capital affects output positively at the aggregate level as well as in all but one region. For most regions, the effects of public capital installed in the region itself are important but the spillover effects induced from public capital installed elsewhere are also very important. In fact, the spillover effects account for over half of the total effects of public capital formation in Spain. Furthermore, these spillover effects have a clear geographical pattern in that they tend to be more important in the peripheral regions of the country. We also find that relative to their share of the Spanish output, the biggest beneficiaries of public capital formation are the largest regions in the country. This suggests that public capital formation has contributed to concentration of output in these regions. Finally, in terms of the effects of public capital formation on the private inputs we find that both private capital and employment are affected positively at the aggregate level as well as for most of the regions. Nevertheless, the effects on private capital seem to be larger. Also, the spillover effects are very important for private capital but not for employment. This reflects a great degree of dynamism and mobility in the capital markets as opposed to the labor markets.public capital, regional effects, regional spillovers, Spain.

Spillover effects of public capital formation : evidence from the spanish regions

Maybe because of the inconclusive nature of the results on the impact of public capital on output at the regional level, the issue of the possible existence of the regional spillovers from public capital formation has received little attention. The objective of this paper is to provide evidence on the possible existence of such spillovers. We consider the case of Spain and its seventeen regions. Our methodological approach consists in estimating an aggregate VAR model for Spain as well as seventeen region-specific VAR models in which both capital installed in the region and capital installed outside the region are allowed to play a role in enhancing regional output. The estimation results can be summarized as follows. The aggregate effects of public capital formation in Spain are important. They cannot, however, be captured in their entirety by the direct effects in each region from public capital installed in the region itself. When for each region both the capital installed in the region and the capital installed outside the region are considered the total disaggregated effect from the seventeen regional models are very much in line with the aggregate results. Furthermore, the aggregate effect seems to be due in almost equal parts to the direct and spillover effects of public capital formation. Ultimately, this paper establishes the relevance of both capital installed in each region and spillover effects in the understanding of the regional decomposition of the aggregate effects of public capital formation. In doing so it opens the door to some tantalizing and potentially highly charged research issues in terms of the determination of the optimal location of public investment projects.public capital, regional spillovers

Decentralization and Governance in Europe: Evidence from Different Expenditure Components

In this article, we consider the impact of fiscal decentralization on government quality by way of disaggregated measures of the former. Specifically, we break down fiscal decentralization into sub-central expenditure on public procurement and compensation of public sector employees. We find that decentralizing public procurement is bad for government performance while the decentralization of public sector wages improves governance. We relate the negative effect to the rent-seeking activity of interest groups and the positive effect to the informational advantage of sub-central provision. Moreover, we explore the impact of the Great Recession on our results and find that it is associated with stronger negative and positive effects of decentralization on governance, something which is consistent with the observed increased in the degree of decentralization since 2007

Producción, empleo y eficiencia productiva de la empresa española

En este artículo se analiza la productividad de las empresas españolas, utilizando la información estadística empresarial contenida en el Sistema de Análisis de Balances Españoles (SABE). Se demuestra la validez de SABE para el estudio de las empresas españolas de más de 9 trabajadores y se analiza el comportamiento diferencial de la productividad de estas empresas teniendo en cuenta el tamaño, el sector de actividad y su vocación exportadora. Los resultados confirman la mayor productividad de la mediana empresa y del sector industrial y, se muestra que la actividad exportadora de las empresas está claramente correlacionada con mayores niveles de productividad.Productividad, PYMES, Exportación, España.

Producción, empleo y eficiencia productiva de la empresa española : una radiografía a partir de SABI

En este artículo se analiza la productividad de las empresas españolas, utilizando la información estadística empresarial contenida en el Sistema de Análisis de Balances Españoles (SABE ). Se demuestra la validez de SABE para el estudio de las empresas españolas de más de 9 trabajadores y se analiza el comportamiento diferencial de la productividad de estas empresas teniendo en cuenta el tamaño, el sector de actividad y su vocación exportadora. Los resultados confirman la mayor productividad de la mediana empresa y del sector industrial y, se muestra que la actividad exportadora de las empresas está claramente correlacionada con mayores niveles de productividad

Fiscal Decentralization and Health Care Access and Quality: Evidence from Local Governments Around the World

In this article we consider the impact on health care access and quality when decentralizing health spending down to local governments, based on data from 49 countries around the world over the period 1996 to 2015. Our empirical results, after controlling for a range of potentially confounding variables, indicate that decentralizing health spending is inimical to timely and effective health care. We moreover explore the role of two specific channels through which fiscal decentralization can undermine health outcomes namely, externalities and foregone economies of scale. We find that decentralizing health expenditure down to the local level may generate externalities to the detriment of health outcomes when it is accompanied by locally elected municipal politicians who are not subject to national parties. Our results also suggest that fiscal decentralization can improve health access and quality when two-thirds or more of the people in a country live in localities with more than 300,000 inhabitants, implying that below this threshold economies of scale may be foregone

Inversion extranjera directa, crecimiento economico y desigualdad en America Latina

Este articulo analiza la relacion entre la inversion extranjera directa (IED), el crecimiento economico y la desigualdad de ingresos en America Latina. Con un panel de datos para 18 economias durante el periodo 1980-2009, se estiman dos ecuaciones que recogen la relacion entre la IED y el crecimiento economico y la desigualdad de ingresos, respectivamente. Los principales resultados obtenidos confirman el impacto positivo de la IED sobre el crecimiento economico, y evidencian impactos significativos no lineales sobre la desigualdad de ingresos: si bien la IED provoca un incremento en la desigualdad, a partir de determinados niveles de IED (en porcentaje del PIB) induce a una mayor equidad.This paper analyzes the relationship between foreign direct investment (FDI), econòmic growth and income inequality in Latin America. Using a data panel of 18 economies for the period 1980-2009, we estimate two equations that represent the relationship between FDI and economic growth, and income inequality, respectively. The main results obtained confirm the positive effects of FDI on economic growth, and show nonlinear significant effects on income inequality: while FDI leads to an increase in inequality, above some level of FDI (in% of GDP) it leads to greater equity

On the redistributive efficiency of fiscal policy

This article analyses the redistributive efficiency of public spending and taxation in a panel of both advanced and developing economies during the last three decades (1984-2012). In order to explore how redistribution is achieved through fiscal policies, a two-stage approach is applied. First, we evaluate the redistributive efficiency of public spending and taxes by using Data Envelopment Analysis (DEA) and obtain considerable variation in redistributive efficiency scores across countries. Second, we use panel truncated and OLS regression analysis to identify the determinants of these differences and reveal the crucial role of economic development, government quality and demographic factors