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The Political Economy of Fiscal Reform in Latin America: The Case of Argentina

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  • Bonvecchi, Alejandro

Abstract

This paper investigates the political economy of fiscal reform activism in Argentina since the late 1980s. Between 1988 and 2008, tax legislation was changed 83 times, fiscal federal rules 14 times, and budgetary institutions sixteen times. Tax and budgetary reforms moved from centralizing revenue sources and spending authority in the federal government to mild decentralization lately. Fiscal federal rules combined centralization of revenues and management in the federal government with short-term compensations for the provinces. This paper contends that reform activism can be explained by the recurrence of economic and policy shocks while reform patterns may be accounted for as consequences of the decreasing political integration of national parties in a polity whose decisionmaking rules encourage the formation of oversized coalitions. The decrease in political integration weakened the national party leaderships ability to coordinate intergovernmental bargaining, and strengthened the local bosses and factions needed to form oversized coalitions.

Suggested Citation

  • Bonvecchi, Alejandro, 2010. "The Political Economy of Fiscal Reform in Latin America: The Case of Argentina," IDB Publications (Working Papers) 1801, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:1801
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    References listed on IDEAS

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    1. Pablo T. Spiller, 2003. "The Institutional Foundations of Public Policy: A Transactions Approach with Application to Argentina," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(2), pages 281-306, October.
    2. Mariano Tommasi & Sebastian Saiegh & Pablo Sanguinetti, 2001. "Fiscal Federalism in Argentina: Policies, Politics, and Institutional Reform," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 157-212, January.
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    4. Edward L. Gibson & Ernesto Calvo, "undated". "Electoral Coalitions and Market Reforms: Evidence from Argentina," IPR working papers 97-17, Institute for Policy Resarch at Northwestern University.
    5. Carciofi, Ricardo, 1990. "La desarticulación del pacto fiscal: una interpretación sobre la evolución del sector público argentino en las dos últimas décadas," Series Históricas 9126, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Michael Mussa, 2002. "Argentina and the Fund: From Triumph to Tragedy," Peterson Institute Press: Policy Analyses in International Economics, Peterson Institute for International Economics, number pa67, February.
    7. Juan Pablo Nicolini & Josefina Posadas & Juan Sanguinetti & Pablo Sanguinetti & Mariano Tommasi, 2002. "Decentralization, Fiscal Discipline in Sub-National Governments and the Bailout Problem: The Case of Argentina," Research Department Publications 3160, Inter-American Development Bank, Research Department.
    8. Calvo, Ernesto, 2007. "The Responsive Legislature: Public Opinion and Law Making in a Highly Disciplined Legislature," British Journal of Political Science, Cambridge University Press, vol. 37(2), pages 263-280, April.
    9. Galiani, Sebastián & Heymann, Daniel & Tommasi, Mariano, 2003. "Expectativas frustradas: el ciclo de la convertibilidad," Estudios y Perspectivas – Oficina de la CEPAL en Buenos Aires 16, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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    Cited by:

    1. Alvaredo, Javier & Bonvecchi, Alejandro & Calvo, Ernesto & Castillo Carrillo, Maximiliano & Bonilla-Castro, Elssy & Gómez Sabaini, Juan C., 2013. "Measuring the Political Economy of Tax Lawmaking: A Methodology and Evidence from Argentina," IDB Publications (Working Papers) 4688, Inter-American Development Bank.
    2. Daniel Artana & Sebastian Auguste & Marcela Cristini & Cynthia Moskovitz & Ivana Templado, 2012. "Sub-National Revenue Mobilization in Latin American and Caribbean Countries: The Case of Argentina," Research Department Publications 4765, Inter-American Development Bank, Research Department.

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    More about this item

    Keywords

    IDB-WP-175;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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