Government spending on health has grown as a percent of GDP over the last 40 years in industrialized countries. Widespread decentralization of healthcare systems has often accompanied this increase in spending. In this paper, we explore the effect of soft budget constraints on subnational health...

This paper describes the institutional changes that have induced a decline in the vertical fiscal imbalance (VFI) - defined as the share of sub-national own spending not financed through own revenues - in four European countries: Belgium, Italy, Norway, and Spain. The decline in VFI was achieved...

Argentina has committed itself to a reform of its revenue-sharing system. This paper examines this system and the issues involved in its redesign, and discusses the pros and cons of various options with a view to specifying a preferred approach.

Countries have adopted various institutional responses to subnational government borrowing. Using a sample of 44 countries 1982-2000, this paper provides a panel data analysis to determine the most effective borrowing constraints for containing local fiscal deficits. The results suggest that no...

This paper analyzes the impact of decentralization on overall fiscal performance in the European Union, taking into account fiscal institutional arrangements. We find that spending decentralization has been associated with sizably better fiscal performance, especially when transfer dependency of...

In many countries the decentralization of spending responsibilities has outpaced the decentralization of revenue powers. Sub-national governments have then to rely on transfers from the center and borrowing to finance their spending. When this occurs, we find that the overall fiscal deficit...

Austria’s federal system comprises the federal government and nine provinces (Länder). The federal system is rather centralized by international standards, with the federal government (including social security funds) accounting for about 70 percent of general government spending, the...

The question of what makes fiscal decentralization work is faced by many policymakers around the world. This book draws on both the relevant literature and policy and technical advice provided by the IMF to a wide range of member countries, and discusses the key factors that help make...

This paper presents an overview of recent U.S. fiscal developments and discusses possible implications of the sharp turn around in the government’s fiscal position. Against this back ground, it also reviews key policy challenges that will need to be addressed to cope with the mounting...

This paper discusses experiences in reestablishing fiscal management in postconflict countries. Building fiscal institutions in postconflict countries essentially entails a three-step process: (1) creating a legal or regulatory framework for fiscal management; (2) establishing or strengthening...