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Intergovernmental Transfers: The Vertical Sharing Dimension

In: Fiscal Equalization

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  • Roy Bahl

    (Georgia State University)

  • Sally Wallace

    (Georgia State University)

Abstract

There is both a horizontal and a vertical dimension to the structure of an intergovernmental transfer (Bahl and Linn, 1992). The vertical share is the total pool of funds to be allocated to subnational governments, while the horizontal shares are the amounts received by individual subnational governments. Most research (and most political attention) is devoted to the latter. The subject of this paper is vertical sharing. We are interested in the question of whether the claim of subnational governments (SNG) on national revenues has been increasing over time. This research paper therefore investigates three issues. The first is the trend and cross-country variation in the level of the vertical share. The second is the range of the practice in vertical sharing. Third, we offer some criteria by which the practice in vertical sharing might be evaluated.

Suggested Citation

  • Roy Bahl & Sally Wallace, 2007. "Intergovernmental Transfers: The Vertical Sharing Dimension," Springer Books, in: Jorge Martinez-Vazquez & Bob Searle (ed.), Fiscal Equalization, chapter 0, pages 205-249, Springer.
    • Handle: RePEc:spr:sprchp:978-0-387-48988-9_9
    DOI: 10.1007/978-0-387-48988-9_9
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    References listed on IDEAS

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    1. Linda Andersson & Thomas Aronsson & Magnus Wikstr–m, 2004. "Testing for Vertical Fiscal Externalities," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(3), pages 243-263, May.
    2. Bev Dahlby, 1996. "Fiscal externalities and the design of intergovernmental grants," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 3(3), pages 397-412, July.
    3. Jorge Martinez-Vazquez & Jameson Boex, 1999. "Fiscal Decentralization in the Russian Federation During the Transition," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper9903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. M Govinda Rao, 1999. "Principles of Intergovernmental Transfers:Have the Finance Commissions Followed Them?," Working Papers 47, Institute for Social and Economic Change, Bangalore.
    5. Michael Keen, 1998. "Vertical Tax Externalities in the Theory of Fiscal Federalism," IMF Staff Papers, Palgrave Macmillan, vol. 45(3), pages 454-485, September.
    6. Prud'homme, Remy, 1995. "The Dangers of Decentralization," The World Bank Research Observer, World Bank, vol. 10(2), pages 201-220, August.
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    Cited by:

    1. Juan Luis Gomez & Jorge Martinez-Vazquez & Cristian Sepúlveda, 2011. "Reining in Provincial Fiscal ‘Owners’: Decentralization in Lao PDR," Chapters, in: Jorge Martinez-Vazquez & François Vaillancourt (ed.), Decentralization in Developing Countries, chapter 6, Edward Elgar Publishing.
    2. Audun Langørgen, 2015. "A structural approach for analyzing fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 22(3), pages 376-400, June.
    3. Ms. Izabela Karpowicz, 2012. "Narrowing Vertical Fiscal Imbalances in Four European Countries," IMF Working Papers 2012/091, International Monetary Fund.
    4. Gu, Gyun Cheol, 2012. "Developing Composite Indicators for Fiscal Decentralization: Which Is The Best Measure For Whom?," MPRA Paper 43032, University Library of Munich, Germany.
    5. Yu, Bingxin & Chen, Kevin Z. & Zhang, Yumei & Zhang, Haisen, 2014. "Evolving public expenditure in Chinese agriculture: Definition, pattern, composition, and mechanism:," IFPRI discussion papers 1407, International Food Policy Research Institute (IFPRI).
    6. Mr. Luc Eyraud & Ms. Lusine Lusinyan, 2011. "Decentralizing Spending More Than Revenue: Does it Hurt Fiscal Performance?," IMF Working Papers 2011/226, International Monetary Fund.
    7. Gustavo Canavire-Bacarreza & Nicolas Guadalupe Zuniga Espinoza, 2010. "Fiscal Transfers a Curse or Blessing? Evidence of Their Effect on Tax Effort for Municipalities in Sinaloa, Mexico," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1030, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    8. Roy Bahl & Geeta Sethi & Sally Wallace, 2009. "West Bengal: Fiscal Decentralization to Rural Governments: Analysis and Reform Options," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0907, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. World Bank, 2007. "China : Improving Rural Public Finance for the Harmonious Society," World Bank Publications - Reports 7664, The World Bank Group.
    10. Darshini J S & K Gayithri, 2019. "Fiscal dependency of States in India," Working Papers 433, Institute for Social and Economic Change, Bangalore.

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