The performance of alternative fiscal rules is examined in an endogenous growth model. The government spends money on infrastructure, maintenance, and health. Infrastructure affects the production of both commodities and health services. The performance of a balanced budget rule, as well as standard and modified golden rules (including and excluding productive spending) and primary surplus rules are compared numerically. Under a range of plausible parameter configurations, a primary surplus rule that excludes productive spending performs better (in a growth sense, although not necessarily from the perspective of short-run macro stability) than alternative rules in response to a variety of shocks.rules, fiscal discipline, productive spending, perfect foresight,
The first generation local government reforms in Turkey partially granted discretion to local governments. However, they have largely failed to improve downward accountability towards citizens. In 2012, the government has embarked on the second generation reforms which aimed to achieve economies of scale in municipal service provision through municipal amalgamation. The government redesigned the configuration of municipalities, abolished special provincial administrations in metropolitan municipal jurisdictions and converted villages to neighborhoods of municipalities. This paper extends the earlier analysis on local government discretion and accountability to these recent changes. The main focus of the paper is on fiscal discretion and accountability since these changes have mostly affected the fiscal structure of local governments. Analyzing the data issued by the Ministry of Finance, the preliminary results show that local governments have become more dependent on intergovernmental transfers.
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