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Fiscal Equalization Schemes and Subcentral Government Borrowing

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  • Barrios, Salvador

    (Asian Development Bank Institute)

  • Martínez–López, Diego

    (Asian Development Bank Institute)

Abstract

Examining the cases of Canada, Germany, and Spain, the role played by fiscal equalization schemes in determining subnational borrowing was analyzed, and the link between regional governments’ primary fiscal balances and gross domestic product per capita was tested econometrically. The study results show that either poor or rich regions can display higher regional public borrowing on average, and these results can be linked to the institutional design of regional equalization systems in place. Particular elements, such as tax efforts and fiscal capacities, also play relevant roles in this regard. Reforms of these schemes can therefore prove instrumental in reducing regional heterogeneity in public borrowing.

Suggested Citation

  • Barrios, Salvador & Martínez–López, Diego, 2016. "Fiscal Equalization Schemes and Subcentral Government Borrowing," ADBI Working Papers 595, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0595
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    More about this item

    Keywords

    Fiscal equalization schemes; government borrowing; public borrowing; subnational borrowing; fiscal capacity; Canada; Germany; Spain; 公共借入金; 政府借入金; 財政能力;
    All these keywords.

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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