Format:
Online-Ressource (15 S.)
Series Statement:
Fiscal consolidation across government levels 3
Content:
This paper provides empirical analysis that measures the cyclical properties of intergovernmental transfers (or grants). Modelling a fiscal policy reaction function this paper tests whether the transfers systems in OECD countries are pro- or counter-cyclical, i.e. whether they offset cyclical fluctuations of sub-central economies or, on the contrary, exacerbate them. Regression results suggest that transfer systems tend to be pro-cyclical in general and in more than half of OECD countries they tend to destabilise sub-central budgets. Transfer pro-cyclicality may be the result of several factors: Transfer spending is often determined as a share of central government tax revenue, which itself tends to fluctuate with the cycle. Moreover, many grants are matching sub-central spending and hence tend to exacerbate fluctuations of that sub-central spending. Pro-cyclical grants could partly explain the often observed pro-cyclicality of subcentral government fiscal policy.
Note:
Zsfassung in franz. Sprache
,
Systemvoraussetzungen: Acrobat Reader.
Language:
English
Keywords:
Amtsdruckschrift
;
Arbeitspapier
;
Graue Literatur
DOI:
10.1787/5k43nxqrlmtf-en
