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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Autores principales:	Sanguinetti, P., Tommasi, M.
Formato:	JOUR
Materias:	Common pool Fiscal federalism Insurance Intergovernmental transfers Risk sharing insurance system intergovernmental relations risk factor theoretical study North America United States
Acceso en línea:	http://hdl.handle.net/20.500.12110/paper_00221996_v62_n1_p149_Sanguinetti
Aporte de:	Biblioteca Digital - Facultad de Ciencias Exactas y Naturales (UBA) de Universidad de Buenos Aires

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spelling	todo:paper_00221996_v62_n1_p149_Sanguinetti2023-10-03T14:28:27Z Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline Sanguinetti, P. Tommasi, M. 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. JOUR info:eu-repo/semantics/openAccess http://creativecommons.org/licenses/by/2.5/ar 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 Sanguinetti, P. Tommasi, M. 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.
format	JOUR
author	Sanguinetti, P. Tommasi, M.
author_facet	Sanguinetti, P. Tommasi, M.
author_sort	Sanguinetti, P.
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
url	http://hdl.handle.net/20.500.12110/paper_00221996_v62_n1_p149_Sanguinetti
work_keys_str_mv	AT sanguinettip intergovernmentaltransfersandfiscalbehaviorinsuranceversusaggregatediscipline AT tommasim intergovernmentaltransfersandfiscalbehaviorinsuranceversusaggregatediscipline
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Intergovernmental transfers and fiscal behavior insurance versus aggregate discipline

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