Complementarity,fiscal decentralization and economic growth

Theories of the voluntary provision of public goods and development economics have clarified that complementarity in the production process is a crucial ingredient to understanding how alternative economic environments affect economic performance. This paper examines how the structures of intra- and inter-regional complementarity affect the relationship between economic growth and fiscal decentralization. We provide a theory that describes how fiscal decentralization affects economic growth under various structures of regional complementarity. Our empirical analysis, based on a panel data set of the fifty states of the United States over the period of 1992–1997, supports our theoretical specification of the production function. Also, we observe a hump-shaped relationship between fiscal decentralization and economic growth that is consistent with our theoretical result. Our analysis also shows that the optimal degree of fiscal decentralization conducive to economic growth is higher than the average of the data in some cases, and hence further decentralization is recommended for economic growth. The previous version of the paper was presented at the 59th Congress of the International Institute of Public Finance (University of Economics in Prague, Prague), the 2003 Fall Meeting of the Japanese Economic Association (Meiji University, Tokyo), the 60th Annual Meeting of the Japanese Institute of Public Finance (Kansai University, Osaka), and in seminars at Yokohama National University and the University of California, Irvine. The authors acknowledge the comments and discussions by people including Timothy Goodspeed, Kiyoshi Mitsui, Motohiro Sato, Etsuro Shioji, Tsunao Okumura, and Craig Parsons. We are also grateful for the comments by the Editor (Amihai Glazer) and two anonymous referees. The usual disclaimer applies. Nishimura acknowledges the financial support from JSPS (Japan Society for the Promotion of Science) Postdoctoral Fellowships for Research Abroad.     

The effect of property taxes on vacation home growth rates: Evidence from Michigan

The Tiebout model assumes that individuals sort to the jurisdiction which best matches their fiscal preferences. However, there is a paucity of reliable estimates for the impact of tax changes on household mobility. We utilize a state mandated school finance reform and temporal differences in vacation home densities to provide a unique test of this fundamental Tiebout assumption. The results show that changes in property taxes explain a significant amount of the variation in vacation home growth; a 3–4 mil decrease in property tax rates is associated with an increase of approximately one vacation home per square kilometer.     

Tiebout choice and residential segregation by race in US metropolitan areas, 1980–2000

This article examines the link between local government fragmentation, or “Tiebout choice,” and segregation between black and white residents. As suggested by Tiebout [Tiebout, C., 1956. A pure theory of local public expenditures. Journal of Political Economy 64, 416–424.], fragmented local governance structures may encourage households to vote with their feet and sort into communities based on their willingness to pay for local public services. This outcome has been well documented. The nuance explored here is that, if the demand for local public services varies by race or if households have preferences for neighbors with specific racial characteristics, local government fragmentation may foster an increase in residential segregation by race across neighborhoods and jurisdictions. Results from metropolitan-level regressions suggest that increased Tiebout choice is associated with increases in black–white residential segregation within US metropolitan areas. Comparable results are obtained from household-level estimates, where the black racial composition of a household's census tract of residence is regressed on household-level controls and racially stratified measures of Tiebout choice. Results from both approaches suggest that a 10% increase in Tiebout choice would increase neighborhood segregation by no more than 1%, while segregation across jurisdictions would increase by between 4% and 7%.     

欧洲货币一体化中的财政约束研究——基于价格水平的财政理论(FTPL)视角

随着目前欧元区财政经济状况的整体恶化,稳定与增长的矛盾凸显,欧盟《稳定与增长公约》框架下的财政约束条款再度引发诸多争议。基于价格水平的财政理论(FTPL)视角,本文试图论证为实现欧元区物价稳定和欧元汇率稳定的双重目的,欧盟《稳定与增长公约》框架下的财政约束有其必要性。     

一般性转移支付:能否促进基本公共服务供给?

财力事权不匹配被广泛认为是制约地方政府供给基本公共服务的主要原因,长期的政策是增加一般性转移支付规模和比重,但是本文的实证结果发现一般性转移支付对基本公共服务的供给的影响极其微弱。这一结论的得出基于2000余个县级样本,同时运用FE-OLS和GMM估计方法估计,分别将教育、医疗、社会保障三项支出作为基本公共服务供给的度量指标。政策含义为,虽然专项转移支付有诸多弊端,但就基本公共服务供给而言,更应依靠专项转移支付,中央通过增加一般性转移支付来促进基本公共服务供给的政策需要改变。     

中国财政政策规则及其体制稳定性分析

本文构建了内生捕捉我国财政政策体制变化的财政规则,并对产出缺口稳定动机和债务稳定动机反应进行了分析。基于马尔科夫转换财政政策反馈规则的实证估计表明,不同体制下,财政赤字与政府债务和产出缺口之间存在不同的政策反应关系;与基于不变参数识别的规则相比,体制转换财政规则能更好地追踪我国财政赤字的时间序列行为。这意味着,假定财政政策体制总是固定的货币政策规则研究以及基于不变财政体制框架VAR度量财政政策冲击高频率效应的实证研究都应慎重。     

THE EFFECTS OF DISCRETIONARY FISCAL POLICY ON MACROECONOMIC AGGREGATES: A REAPPRAISAL

Abstract Fiscal stimuli to recover? A cascade of academic and layman articles debate the effectiveness of fiscal policy in stimulating the economy backed up by different economic models and empirical support. This paper surveys the theoretical predictions and recent empirical vector autoregression evidence on the short‐run effects of discretionary fiscal policy on macroeconomic aggregates.     

Local fiscal multipliers and spillover effects: Evidence from Philippine regions

Fiscal policy in developed countries has been a rich topic since the Great Recession. However, research has remained limited for developing countries despite their similar use of fiscal policy and concerns about the efficiency of public spending. To help address this research gap, this paper provides a case study of multiplier effects of local government spending in regions in the Philippines as well as spillover effects of local government spending across regions. An instrumental variable based on the country’s intergovernmental transfer system is used to identify regional public spending in panel regressions. The local fiscal multiplier is estimated to be above one, where a 1-peso rise in spending by local government units in a region corresponds to a 1.2-peso rise in regional output. Multiplier effects are highest for capital expenditures and appear to be primarily driven by the services sector. Spillover effects are comparatively large, at around 1.8–2.0, highlighting the important role of domestic trade when stimulating regional economic activity.     

THE ECONOMICS OF FISCAL DECENTRALIZATION

Abstract There is no complete overview or discussion of the literature of the economics of federalism and fiscal decentralization, even though scholarly interest in the topic has been increasing significantly over recent years. This paper provides a general, brief but comprehensive overview of the main insights from the literature on fiscal federalism and decentralization. In doing so, literature on fiscal federalism and decentralization is grouped into two main approaches: ‘first generation approach’ and ‘an emerging second generation approach’. The discussion generally covers the two notions of fiscal decentralization: ‘fiscal autonomy’ and ‘fiscal importance’ of subnational governments as the background of the most recently developed index of fiscal decentralization in Vo. The relevance of this discussion to any further development of a fiscal decentralization index is briefly noted.     

Do independent fiscal institutions cause better fiscal outcomes in the European Union?

This paper explores the budgetary implications of the independent fiscal institutions (IFIs) in the European Union (EU). We employ a dynamic panel model for the period 2000–2019 and find that these fiscal watchdogs have a positive and significant influence not only on government budget balance for the EU member states, resulting in smaller government budget deficits, but also on countries’ compliance with fiscal rules, results that hold across alternative fiscal balances. IFIs appear to have a beneficial impact on fiscal performance and compliance with numerical targets in countries with poorly designed fiscal responsibility norms but weaker influence when fiscal rules are less binding (well-designed fiscal rules). The findings remain significant regardless the year of accession to the EU (old vs. new members) or euro-area status (euro-area vs. non-euro-area members). However, we document that IFIs play a larger role in countries that established these monitoring bodies before 2013, indicating that experience matters in IFI performance. Also, our findings show that the influence of IFIs remains if we take into account institutional reforms in which their mandates were extended with different powers and tasks, which has a positive and significant effect on fiscal balances. Moreover, we find that, under the circumstance of systemic and banking crises, these institutions are associated with improved fiscal outcomes, reflecting their increased concern about the path of public finances and their role in reducing budgetary forecasting biases. Our results are robust to a variety of specifications and models, including alternative measures of the government budget balance and after controlling for a set of institutional characteristics and for potential endogeneity in the estimations.     

金融科技能影响金融分权吗？——来自金融科技信贷的证据

金融科技正在变革全球金融体系、鼎新世界金融格局。那么,金融科技在改变中国金融业格局的同时,是否会影响中国中央和地方之间的金融分权呢?本文在理论分析的基础上,使用2010—2018年中国31个省级区域的面板数据进行实证检验,结果表明金融科技降低了地方政府的金融分权水平。进一步讨论发现:金融科技对金融分权的抑制效应受到财政分权和城镇化率影响,财政分权越大的地区,金融科技对金融分权的抑制效应越明显;城镇化率越高的地区,金融科技对金融分权的抑制效应越小;在中国区域经济发展不平衡的现实背景下,金融科技对金融分权的抑制作用在金融发展欠发达地区比在较发达地区更强。     

ON THE EFFECTIVENESS OF FISCAL POLICY AS AN INSTRUMENT OF MACROECONOMIC POLICY

This paper demonstrates that fiscal policy is an effective and essential instrument of stabilisation macroeconomic policy. This is particularly so if it is co-ordinated with monetary policy, especially in the current worldwide economic situation.