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Subnational government’s budget deficit targets in a Monetary Union: the Spanish case 1995-2010

Author

Listed:
  • Joan Rosselló Villalonga

    (University of the Balearic Islands)

  • Andreu Sansó Rosselló

    (University of the Balearic Islands)

Abstract

We set out an analysis of the factors that explain subnational budget balances. Ours results suggest that long run deficit targets should not be distributed linearly across Autonomus Communities, and cannot be expected to be fulfilled in the same time-horizon. More important, financing agreements should be redesigned in order to avoid the central government having the opportunity to transfer its deficit to Autonomous Communities. Finally, more budgetary coordination is needed in order to prevent that Autonomous Communities circumvent central governments fiscal rules using their public entities.

Suggested Citation

  • Joan Rosselló Villalonga & Andreu Sansó Rosselló, 2016. "Subnational government’s budget deficit targets in a Monetary Union: the Spanish case 1995-2010," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 89(01), pages 280-279.
    • Handle: RePEc:ekz:ekonoz:2016111
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    More about this item

    Keywords

    Fiscal federalism; budget balances; tax autonomy; output gap; panel data;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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