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Analysis of alternative proposals to reform the Spanish intergovernmental transfer system for municipalities

Author

Listed:
  • Francisco Pedraja Chaparro

    (University of Extremadura)

  • José Manuel Cordero Ferrera

    (University of Extremadura)

Abstract

This paper offers an evaluation about the current design of the unconditional transfer system to the municipalities in Spain taking as a reference the precepts of fiscal federalism theory. The analysis carried out is based on the released results of the model during the period from 2004-2009, in which two different stages can be identified within the economic cycle; an expansive one up until 2007 and a recession period after that year. These data highlight that the design of the model along with the application of certain funding guarantees, have caused a disconnection between the evolution of the resources and the variables representative of need and capacity. Faced with this scenario, different reform alternatives are proposed with the aim of reconnecting the resources with these indicators. The potential impact of those proposals is evaluated using a simulation exercise in which the basic rule of status quo is assumed, i.e., that no municipality loses funding as a consequence of the new system.

Suggested Citation

  • Francisco Pedraja Chaparro & José Manuel Cordero Ferrera, 2011. "Analysis of alternative proposals to reform the Spanish intergovernmental transfer system for municipalities," Working Papers 2011/33, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2011-33
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    References listed on IDEAS

    as
    1. Robin Boadway & Anwar Shah, 2007. "Intergovernmental Fiscal Transfers : Principles and Practice," World Bank Publications - Books, The World Bank Group, number 7171.
    2. Jorge Martinez-Vazquez & Bob Searle, 2007. "Challenges in the Design of Fiscal Equalization and Intergovernmental Transfers," Springer Books, in: Jorge Martinez-Vazquez & Bob Searle (ed.), Fiscal Equalization, chapter 0, pages 3-10, Springer.
    3. Robin Boadway, 2001. "Inter-Governmental Fiscal Relations: The Facilitator of Fiscal Decentralization," Constitutional Political Economy, Springer, vol. 12(2), pages 93-121, June.
    4. Anwar Shah, 2008. "Macro Federalism and Local Finance," World Bank Publications - Books, The World Bank Group, number 6453.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. José Manuel Cordero Ferrera & Francisco Pedraja Chaparro & Javier Suárez Pandiello & Alfonso Utrilla de la Hoz, 2013. "El índice de evolución de los ingresos tributarios del Estado y sus efectos sobre la PIE municipal," Hacienda Pública Española / Review of Public Economics, IEF, vol. 206(3), pages 137-161, September.

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    More about this item

    Keywords

    Fiscal federalism; intergovernmental transfers; municipalities;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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