Decentralization and Fiscal Discipline in Subnational Governments:The Bailout Problem in Uruguay

Filgueira, Fernando; Kamil, Herman; Lorenzo, Fernando; Moraes, Juan Andrés; Rius, Andrés

doi:10.2139/ssrn.1814716

Cited by 6 publications

(5 citation statements)

References 11 publications

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“…This effect is found to be stronger for developing countries. Filgueira et al (2002) find evidence linking decentralization to higher deficits for the case of Uruguay, whereas Freitag and Vatter (2008) find the link to be operational in Switzerland only in times of crisis.…”

Section: Review Of the Literaturementioning

confidence: 95%

Vertical Fiscal Imbalances and the Accumulation of Government Debt

Aldasoro

Seiferling²

2014

IMF Working Papers

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The implications of delegating fiscal decision making power to sub-national governments has become an area of significant interest over the past two decades, in the expectation that these reforms will lead to better and more efficient provision of public goods and services. The move towards decentralization has, however, not been homogeneously implemented on the revenue and expenditure side: decentralization has materialized more substantially on the latter than on the former, creating "vertical fiscal imbalances". These imbalances measure the extent to which sub-national governments' expenditures are financed through their own revenues. This mismatch between own revenues and expenditures may have negative consequences for public finances performance, for example by softening the budget constraint of sub-national governments. Using a large sample of countries covering a long time period from the IMF's Government Finance Statistics Yearbook, this paper is the first to examine the effects of vertical fiscal imbalances on fiscal performance through the accumulation of government debt. Our findings suggest that vertical fiscal imbalances are indeed relevant in explaining government debt accumulation, and call for a degree of caution when promoting fiscal decentralization.

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Section: Review Of the Literaturementioning

confidence: 95%

Vertical Fiscal Imbalances and the Accumulation of Government Debt

Aldasoro

Seiferling²

2014

IMF Working Papers

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“…Uruguay puede ser considerado un caso atrasado en la región debido a que si bien su primera experiencia descentralizadora se dio a inicios de los noventa en la ciudad de Montevideo (capital del país y gobernada desde ese entonces por un partido político de izquierda, el Frente Amplio -FA-), y además existieron esfuerzos por fortalecer a los Gobiernos Departamentales luego de la dictadura, sobre todo en materia fiscal y administrativa (Filgueira, et al, 2002); no fue hasta la primera década del siglo XXI cuando se promovió desde el gobierno nacional un cambio institucional tendiente a profundizar la descentralización, mediante la creación del mencionado tercer nivel de gobierno.…”

Section: E L P Runclassified

Invirtiendo La Secuencia: El Proceso De Descentralización Uruguayo Bajo Gobiernos De Izquierda (2005-2015)

Freigedo

Milanesi

Fuentes

2017

RIEM

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“…In terms of control, the SIIF lacks the ability to develop proper auditing activities. The "delegated auditors" of the Tribunal de Cuentas monitor the units' operations, but they cannot ban the execution of expenditures, particularly in the case of subnational governments (Filgueira et al, 2002). Periodically, the Tribunal de Cuentas reports its formal and substantial observations to Parliament, but in fact legislators rarely use this information to punish irresponsible administrators.…”

Section: Efficiency: Looking At the Budget Execution And Monitoring S...mentioning

confidence: 99%

Who Decides the Budget? A Political Economy Analysis of the Budget Process in Latin America

Mueller,

Moraes,

Carranza

et al. 2009

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This book presents a new framework for analyzing the political economy of budget processes in Latin America that is based on the following premises: i) the budget process must be considered as part of the overall policymaking process rather than in isolation; ii) budget outcomes cannot be fully explained on the basis of only one or two political or institutional dimensions; iii) actual practices must be considered as well as formal rules; iv) budget processes affect dimensions of fiscal outcomes besides fiscal sustainability, particularly efficiency, adaptability, and representativeness; v) political actors and their incentives must be considered at different stages of the policymaking process and in different institutional contexts. Case studies are presented for eight countries in the region, and a final chapter presents conclusions and suggestions for further research.

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Decentralization and Fiscal Discipline in Subnational Governments:The Bailout Problem in Uruguay

Cited by 6 publications

References 11 publications

Vertical Fiscal Imbalances and the Accumulation of Government Debt

Vertical Fiscal Imbalances and the Accumulation of Government Debt

Invirtiendo La Secuencia: El Proceso De Descentralización Uruguayo Bajo Gobiernos De Izquierda (2005-2015)

Who Decides the Budget? A Political Economy Analysis of the Budget Process in Latin America

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