Fiscal Consolidation and Decentralisation : A Tale of Two Tiers
Darby, Julia and Muscatelli, V Anton and Roy, Graeme (2004) Fiscal Consolidation and Decentralisation : A Tale of Two Tiers. Discussion paper. University of Strathclyde, Glasgow.
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Abstract
This paper contributes to the established literature on fiscal consolidations (e.g. Alesina and Perotti, 1995, 1997, Alesina et al, 1998) by investigating the distinct behaviour of central and sub-central tiers of government during general government consolidation attempts. In the light of different degrees of decentralisation across OECD countries, and the different responsibilities devolved to sub-central tiers, we believe that this approach offers an illuminating insight into the analysis of fiscal consolidations and their success. We show that the involvement of the sub-central tiers of government is crucial to achieving cuts in expenditure, particularly in relation to the overall size of the government wage bill. In addition, central governments appear to exert a strong influence on the expenditure of sub-central tiers through their grant allocations, and control of these allocations appears to have a considerable impact upon the overall success of consolidation attempts. Finally we demonstrate that there is a skewness in cuts towards sub-central capital expenditure both when central governments cut grant allocations and when sub-central governments engage in lone consolidation attempts.
Creators(s): |
Darby, Julia ![]() | Item type: | Monograph(Discussion paper) |
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ID code: | 67785 |
Notes: | Published as a paper within the Discussion Papers in Economics, No. 04-01 (2004) |
Keywords: | fiscal studies, monetary policy, economics, government spending, Economic Theory, Economics, Econometrics and Finance(all) |
Subjects: | Social Sciences > Economic Theory |
Department: | Strathclyde Business School > Economics Strathclyde Business School > Fraser of Allander Institute |
Depositing user: | Pure Administrator |
Date deposited: | 14 May 2019 09:15 |
Last modified: | 13 Jan 2021 02:57 |
URI: | https://strathprints.strath.ac.uk/id/eprint/67785 |
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