Did Fiscal Rules Contribute To Improve Provinces’ Fiscal Situation In Argentina?

The recourse to Fiscal Rules, both in developed and emerging economies, may be traced back to the nineties following national governments’ concern with the level of public spending and the excessive indebtedness which, in turn, put at stake macroeconomic stability. In this field. a worth mentioning development is the extension of fiscal rules to also countries’ subnational governments as the extensive literature shows for instance for the United States, Canada, Argentina and many others. In our country, fiscal rules aimed at restoring subnational public finances badly hurt since 2001 due to a long lasting economic recession, the excessive burden of debt stock and services and the nil possibility of acceding to national and international financial and capital markets. In this connection, this paper aims at ascertaining the performance of the Law 25917 and its modifications which set clear and compulsory quantitative targets concerning ceilings to public spending, fiscal equilibrium and limits to national and subnational debt, for what and analysis of stylized facts is carried out. Also, a Logit Model is estimated with the purpose of assessing provinces’ fiscal compliance of the mentioned Law during the period 2006-2017and for what diverse independent variables were resorted to.