Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline
This paper evaluates the trade-off between the advantages of risk sharing and the perils of common pool problems in federal fiscal arrangements. Under the assumption of asymmetric information we evaluate two alternative regimes of intergovernmental transfers. In one regime, the central government pr...
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2004
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| Acceso en línea: | https://bibliotecadigital.exactas.uba.ar/collection/paper/document/paper_00221996_v62_n1_p149_Sanguinetti http://hdl.handle.net/20.500.12110/paper_00221996_v62_n1_p149_Sanguinetti |
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paper:paper_00221996_v62_n1_p149_Sanguinetti2023-06-08T14:47:19Z Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline Common pool Fiscal federalism Insurance Intergovernmental transfers Risk sharing insurance system intergovernmental relations risk factor theoretical study North America United States This paper evaluates the trade-off between the advantages of risk sharing and the perils of common pool problems in federal fiscal arrangements. Under the assumption of asymmetric information we evaluate two alternative regimes of intergovernmental transfers. In one regime, the central government pre-commits to a certain level of transfers that compensate vertical fiscal imbalances and provide some limited ex-ante insurance. In the other regime, it accommodates ex-post the fiscal needs of the different provinces. In this second case, full-insurance results, but the economy is subject to a tragedy of the fiscal commons, with excessive subnational spending, insufficient local taxation, and reduced production of federal public goods. We find the range of parameters for which one or the other institutional regime will be preferable. The result is a fiscal-federalism version of the usual trade-off between rules and discretion. © 2003 Elsevier B.V. All rights reserved. 2004 https://bibliotecadigital.exactas.uba.ar/collection/paper/document/paper_00221996_v62_n1_p149_Sanguinetti http://hdl.handle.net/20.500.12110/paper_00221996_v62_n1_p149_Sanguinetti |
| institution |
Universidad de Buenos Aires |
| institution_str |
I-28 |
| repository_str |
R-134 |
| collection |
Biblioteca Digital - Facultad de Ciencias Exactas y Naturales (UBA) |
| topic |
Common pool Fiscal federalism Insurance Intergovernmental transfers Risk sharing insurance system intergovernmental relations risk factor theoretical study North America United States |
| spellingShingle |
Common pool Fiscal federalism Insurance Intergovernmental transfers Risk sharing insurance system intergovernmental relations risk factor theoretical study North America United States Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline |
| topic_facet |
Common pool Fiscal federalism Insurance Intergovernmental transfers Risk sharing insurance system intergovernmental relations risk factor theoretical study North America United States |
| description |
This paper evaluates the trade-off between the advantages of risk sharing and the perils of common pool problems in federal fiscal arrangements. Under the assumption of asymmetric information we evaluate two alternative regimes of intergovernmental transfers. In one regime, the central government pre-commits to a certain level of transfers that compensate vertical fiscal imbalances and provide some limited ex-ante insurance. In the other regime, it accommodates ex-post the fiscal needs of the different provinces. In this second case, full-insurance results, but the economy is subject to a tragedy of the fiscal commons, with excessive subnational spending, insufficient local taxation, and reduced production of federal public goods. We find the range of parameters for which one or the other institutional regime will be preferable. The result is a fiscal-federalism version of the usual trade-off between rules and discretion. © 2003 Elsevier B.V. All rights reserved. |
| title |
Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline |
| title_short |
Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline |
| title_full |
Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline |
| title_fullStr |
Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline |
| title_full_unstemmed |
Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline |
| title_sort |
intergovernmental transfers and fiscal behavior insurance versus aggregate discipline |
| publishDate |
2004 |
| url |
https://bibliotecadigital.exactas.uba.ar/collection/paper/document/paper_00221996_v62_n1_p149_Sanguinetti http://hdl.handle.net/20.500.12110/paper_00221996_v62_n1_p149_Sanguinetti |
| _version_ |
1768542724914413568 |